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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
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 þ
Filed by a Party other than the
Registrant o
Check the appropriate box:
o Preliminary
Proxy Statement
o Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
þ Definitive
Proxy Statement
o Definitive
Additional Materials
o Soliciting
Material Under
Rule 14a-12
AMERICAN GREETINGS CORPORATION
(Name of Registrant as Specified in
its Charter)
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1)
and 0-11.
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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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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Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials:
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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.
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(1)
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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TABLE OF CONTENTS
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of
Shareholders of American Greetings Corporation. The meeting will
be held at 2:30 p.m., Cleveland, Ohio time on Friday,
June 24, 2011, at our World Headquarters, One American
Road, Cleveland, Ohio 44144.
The accompanying Notice of Annual Meeting of Shareholders and
Proxy Statement describe the items to be considered and acted
upon by the shareholders.
If you own shares of record, you will find enclosed a proxy and
voting instruction card or cards and an envelope in which to
return the card(s). Whether or not you plan to attend this
meeting, please sign, date and return your enclosed proxy and
voting instruction card(s), or vote over the phone or Internet,
as soon as possible so that your shares can be voted at the
meeting in accordance with your instructions. You can revoke
your proxy before the Annual Meeting and issue a new proxy as
you deem appropriate. You will find the procedures to follow if
you wish to revoke your proxy on page 2 of the Proxy
Statement. Your vote is very important. I look forward to seeing
you at the meeting.
Sincerely,
Zev Weiss
Chief Executive Officer
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
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Time and Date: |
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2:30 p.m., Cleveland, Ohio time June 24, 2011 |
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Place: |
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American Greetings Corporation
World Headquarters
One American Road
Cleveland, Ohio 44144 |
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Purpose: |
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1. To elect three Class I directors
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2. To approve an amendment to the American Greetings 2007
Omnibus Incentive Compensation Plan to increase the number of
common shares available for issuance thereunder from 5,500,000
(4,400,000 Class A common shares and 1,100,000 Class B
common shares) to 6,800,000 shares (5,600,000 Class A
common shares and 1,200,000 Class B common shares)
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3. To hold an advisory vote on named executive officer
compensation
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4. To hold an advisory vote to recommend the frequency for
future shareholder advisory votes on named executive officer
compensation
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5. To transact such other business as may properly come
before the meeting or any adjournments thereof
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Who can vote: |
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You can vote on the proposals above if you are a shareholder of
record on May 2, 2011. |
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Directions: |
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The World Headquarters campus may be entered from the private
road off Memphis Avenue, or from American Road off Tiedeman
Road. As you approach from either the private road or American
Road, there will be signs directing you to the meeting place.
The principal address of American Greetings is One American
Road, Cleveland, Ohio 44144. |
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How you can vote: |
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It is important that your shares be represented and voted
whether you plan to attend the meeting. YOU CAN VOTE BY
PROXY IN ONE OF THREE WAYS: |
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By completing and returning your proxy and voting
instruction card in the enclosed envelope; or
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By telephone using the toll-free number on your
proxy and voting instruction card; or
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Over the Internet, by visiting the Web site noted on
your proxy and voting instruction card.
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By order of the Board of Directors,
CATHERINE M. KILBANE
Secretary
Dated May 13, 2011
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY
MATERIALS FOR SHAREHOLDERS MEETING TO BE HELD ON JUNE 24,
2011:
Our Proxy Statement and Annual Report to Shareholders are
available at
http://investors.americangreetings.com
GENERAL INFORMATION
Proxy
Solicitation
The Board of Directors (the Board) of American
Greetings Corporation (which is referred to in this Proxy
Statement as American Greetings, the
company, we, us or
our) has ordered solicitation of the accompanying
proxy and voting instructions in connection with the Annual
Meeting of Shareholders (the Annual Meeting) to be
held on Friday, June 24, 2011, at 2:30 p.m., Cleveland
time, at our World Headquarters, One American Road, Cleveland,
Ohio 44144, to consider and act upon the matters specified in
the accompanying Notice of Annual Meeting of Shareholders.
Copies of this Proxy Statement and the accompanying Notice and
proxy and voting instruction card, along with our Annual Report
to Shareholders, are first being sent or given to shareholders
on or about May 13, 2011.
The expense of soliciting proxies, including the costs of
preparing, assembling and mailing the Notice, Proxy Statement
and proxy and voting instruction card, will be borne by us.
Besides solicitation by mail, our officers and other regular
employees may solicit proxies by personal interview, telephone,
electronic mail and facsimile. We have asked brokerage houses,
banks and other persons holding shares in nominee names to
forward solicitation materials to the beneficial owners of
shares held by such nominees, and we will reimburse such persons
for their reasonable expenses.
How to
Vote
Registered Holders. If your shares are
registered in your name, then you are a registered
holder and you may vote in person or by proxy. If, after
reading the proxy materials, you decide to vote by proxy, you
may do so in any ONE of the following three ways:
1. By telephone. With your proxy
and voting instruction card in front of you, you may call the
toll-free number
1-800-690-6903
and follow the simple instructions.
2. Over the Internet. With your
proxy and voting instruction card in front of you, you may use a
computer to access the Web site www.proxyvote.com where
you can follow the simple instructions that will be given to you
to record your vote.
3. By mail. You may mark, sign and
date your proxy and voting instruction card and return it in the
enclosed prepaid and addressed envelope. You do not need to mail
the proxy and voting instruction card if you have voted by
telephone or over the Internet.
The Internet and telephone voting procedures are designed to
authenticate votes cast and allow shareholders to appoint a
proxy and to confirm that their actions have been properly
recorded. Specific voting instructions are set forth on the
accompanying proxy and voting instruction card.
Participants in the Retirement Profit Sharing and Savings
Plan. One of the investment alternatives in
the American Greetings Retirement Profit Sharing and Savings
Plan is a fund consisting of our Class A common shares.
Participants investing in the American Greetings stock fund are
allocated units that represent an interest in such shares. If
you invest in the American Greetings stock fund of the
Retirement Profit Sharing and Savings Plan, the plans
independent trustee, Vanguard Fiduciary Trust Company, will
vote the Class A common shares allocated to your account
according to your directions. Participants may give voting
directions
to the plan trustee in any ONE of the three ways set forth above
under Registered Holders. The trustee will vote
shares for which it has not received instructions in accordance
with instructions that it receives from us. We will direct the
trustee based on the direction of the plans administrative
committee, which is a committee consisting of our employees.
Nominee Shares. If you are a beneficial
owner of shares held in street name through a
broker, bank or other nominee that holds the shares on your
behalf, you may vote in person at the Annual Meeting by
obtaining a legal proxy from the nominee that holds your shares.
In addition to voting in person, you may vote by proxy by
completing and signing the voting instruction card provided to
you by the nominee that holds your shares, or by voting via the
Internet or by telephone as permitted by the nominee that holds
your shares. As a beneficial owner, in order to ensure your
shares are voted, you must provide voting instructions to
the broker, bank or other nominee by the deadline provided in
the materials you receive from them. Because all of the matters
being voted upon at the Annual Meeting are considered
non-routine matters under the rules of the New York Stock
Exchange (NYSE), brokers, banks or other nominees
may not vote on those matters unless they have
received specific voting instructions from beneficial owners.
Such shares that brokers do not have the authority to vote in
the absence of timely instructions from the beneficial owners
result in what is commonly referred to as broker
non-votes.
Changing
or Revoking Your Proxy
You have the right to change or revoke your proxy prior to the
closing of the polls as indicated on your proxy and voting
instruction card and may do so in any one of the following four
ways:
1. send a written notice to the American Greetings
Secretary stating that you want to change your proxy vote;
2. submit a properly signed proxy and voting instruction
card with a later date;
3. enter later-dated telephone or Internet voting
instructions; or
4. vote in person at the Annual Meeting. NOTE: Because
your Retirement Profit Sharing and Savings Plan shares are held
in a qualified plan, you are not able to vote the shares
allocated to your account in the plan in person at the Annual
Meeting.
Your presence at the Annual Meeting, without more, will not
revoke your proxy. However, you may revoke your proxy in the
manner described above at any time before it has been exercised.
If you plan to attend the Annual Meeting, please check the
attendance box on the enclosed proxy and voting instruction card
or indicate so when prompted if you are voting by telephone or
over the Internet.
If you are a beneficial shareholder only, that is if your shares
are not registered in your name but are held by a broker, bank
or other nominee, you will have to check with your broker, bank
or other nominee to determine how to change your vote. Also note
that if you plan to attend the Annual Meeting, you will not be
able to vote in person at the meeting any of your shares held by
a nominee unless you have a valid proxy from the nominee.
Cumulative
Voting
If cumulative voting is invoked as described below, a
shareholder may cumulate votes for the election of a director
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 is entitled. The shareholder also may
distribute his or her votes between or among two or more
nominees on the same basis.
Shareholders have cumulative voting rights in the election of
directors if:
(i) any shareholder gives notice in writing to the
President, a Vice President or the Secretary of American
Greetings, not less than 48 hours before the time fixed for
the holding of the Annual Meeting, that he or she desires that
the voting at such Annual Meeting be cumulative, and
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(ii) an announcement that a shareholder has given American
Greetings notice of cumulative voting is made upon the convening
of the Annual Meeting by the Chairman of the Board or the
Secretary or by or on behalf of the shareholder giving such
notice.
Unless otherwise indicated by the shareholder, where cumulative
voting is invoked, the persons named in the accompanying proxy
and voting instruction card will vote, in their discretion, for
one or more of the nominees for whom authority to so vote 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 and voting instruction card for
only those Board nominees for whom authority has not been
withheld.
How
Shares Will Be Voted
The shares represented by your proxy will be voted in accordance
with your instructions indicated on the proxy and voting
instruction card or with the instructions you provided by
telephone or over the Internet. If you return an executed proxy
and voting instruction card without any such instructions, the
shares represented by your proxy will be voted in accordance
with the Boards recommendations.
Required
Vote
The presence at the Annual Meeting, either in person or by
proxy, of the holders of not less than 25% of the total voting
power of American Greetings on the record date will represent a
quorum, permitting the conduct of business 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. If you withhold your vote
from one or more of the nominees, the vote will be treated as
present at the meeting for purposes of determining a quorum;
however, broker non-votes with respect to one or more nominees
will not be treated as present for purposes of determining a
quorum. Neither withhold from voting votes nor broker non-votes
will be counted as votes cast with respect to the election of
one or more directors and, accordingly, will have no effect on
the outcome of the vote.
Approval of Proposal 2 requires the affirmative vote of a
majority of the votes cast on the proposal and requires that the
total vote cast on the proposal represent over 50% in interest
of all securities entitled to vote on the proposal. For purposes
of the NYSE shareholder approval requirements, abstentions are
deemed to be votes cast and will have the same effect as votes
against Proposal 2. Broker non-votes will negatively impact
the ability to meet the requirement that the total vote cast on
Proposal 2 represent over 50% in interest of all securities
entitled to vote on the proposal.
If the amendment to the American Greetings Corporation 2007
Omnibus Incentive Compensation Plan is not approved by our
shareholders, it will not become effective. However, the Board
reserves the right, subject to all applicable laws, regulations
and stock exchange listing standards, to adopt such other
compensation plans and programs as it deems appropriate and in
the best interests of American Greetings and its shareholders.
Approval of Proposal 3 requires the affirmative vote of the
majority of the votes cast on the proposal. With respect to
Proposal 4, the frequency of the advisory vote (every year,
every two years or every three years) receiving the greatest
number of votes cast will be considered the frequency
recommended by our shareholders. Neither abstentions nor broker
non-votes will be counted as votes cast with respect to
Proposal 3 or Proposal 4 and, accordingly, will have
no effect on the outcome of the vote on either proposal.
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Voting
Securities and Record Date
As of May 2, 2011, there were outstanding, excluding
treasury shares which cannot be voted, 37,485,494 Class A
common shares entitled to one vote per share and 2,937,927
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
May 2, 2011 are the only shareholders entitled to notice of
and to vote at the Annual Meeting and any adjournments thereof.
Shares Included
on the Proxy and Voting Instruction Card
If you are both a registered shareholder of American Greetings
and hold shares through the Retirement Profit Sharing and
Savings Plan, you may have received one proxy and voting
instruction card that shows all American Greetings common shares
registered in your name, including all shares you have (based on
the units credited to your account) under the Retirement Profit
Sharing and Savings Plan. Accordingly, your proxy and voting
instruction card also serves as your voting directions to the
independent trustee of the Retirement Profit Sharing and Savings
Plan.
Please note, however, that unless the identical name or names
appeared on all your accounts, we were not able to consolidate
your share information. If that was the case, you received more
than one proxy and voting instruction card and must vote each
separately.
If your shares are held through a broker, bank or other nominee,
you will receive either a voting form or a proxy card from the
nominee with specific instructions about the voting methods
available to you. As a beneficial owner, in order to ensure your
shares are voted, you must provide voting instructions to
the broker, bank or other nominee by the deadline provided in
the materials you receive from them. Under the rules of the
NYSE, your broker cannot vote your shares on the election of
directors if you do not timely provide instructions for voting
your shares.
CORPORATE
GOVERNANCE
Shareholders elect the members of the Board to oversee their
interests in the long-term health, the overall success and the
financial strength of our business. The Board serves as our
ultimate decision-making body, except for those matters reserved
to or shared with the shareholders. The Board selects and
oversees the members of senior management who are charged by the
Board with conducting our business.
The Board follows, both formally and informally, corporate
governance principles designed to assure that, through its
membership, composition, and committee structure, the Board is
able to provide us informed, competent and independent
oversight. The Board has reviewed our corporate governance
policies and committee charters to assure that the Board
continues to meet fully its responsibilities to our
shareholders. Below is a description of the measures in place to
assure that objective is achieved.
Corporate
Governance Guidelines
The Board has adopted corporate governance guidelines, which may
be found in the investors section of our Web site at
www.corporate.americangreetings.com. These corporate
governance guidelines are intended to assure that director
qualifications, committee structure and overall board processes
provide good corporate governance and independent oversight of
management.
Code of
Business Conduct and Ethics
The Board has adopted a code of business conduct and ethics to
govern our directors, executive officers and employees,
including the principal executive officer, the principal
financial officer and the principal accounting officer. A
current copy of the code is available on our Web site at
www.corporate.americangreetings.com. We will disclose any
future amendments to, or waivers from, certain provisions of the
code of business conduct and ethics for executive officers and
directors on our Web site.
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Independent
Directors
The NYSE rules require listed companies to have a board of
directors with at least a majority of independent directors.
Under the NYSE rules, a director qualifies as
independent upon the Boards affirmative
determination that the director has no material relationship
with American Greetings (either directly or as a partner,
shareholder or officer of an organization that has a
relationship with American Greetings). In assessing the
materiality of a relationship, the Board has not adopted
categorical standards beyond the NYSE criteria, but rather
broadly considers all relevant facts and circumstances. The
Board has determined that Drs. Cowen and Thornton and
Messrs. Dunn, MacDonald, Merriman and Ratner are
independent under the NYSE rules. In the course of the
Boards determination regarding the independence of each
non-management director, the Board considered the following
transactions, relationships and arrangements in determining that
the director is independent:
1. Dr. Cowen is a director of, and Mr. Ratner is
a director, a greater than 10% shareholder and the President and
Chief Executive Officer of, Forest City Enterprises. A
subsidiary of Forest City Enterprises rents retail store space
in various shopping malls to us pursuant to lease agreements in
the ordinary course of business. We sold our retail store
operations to Schurman Fine Papers in April 2009, and since the
time of the sale we have subleased the retail store locations to
Schurman Fine Papers. In addition, Mr. Ratner has a 10%
indirect ownership interest, through a trust, in a Cleveland,
Ohio shopping mall that leased space to us for one retail store
that is now under sublease to Schurman Fine Papers. That
shopping mall is managed by RMS Investment Corporation
(RMS). Each of Mr. Ratners four children
has a 4.28% ownership interest in RMS.
2. During fiscal 2011, Dr. Cowen was a member of the
board of directors of Jo-Ann Stores, Inc., a company that in the
ordinary course of business purchases our products.
Dr. Thornton is a member of the board of directors of
Applied Industrial Technologies, Inc., a company from which we
purchase products and services from time to time in the ordinary
course of business. Mr. Dunn is the Chief Executive Officer
and owner of 5% of the common equity of HIT Entertainment
Limited, a company from which we license certain character
properties in the ordinary course of business.
3. We made discretionary charitable contributions to
charitable and other non-profit organizations where each of
Messrs. MacDonald, Merriman and Ratner, and Drs. Cowen
and Thornton serves or has served as an executive officer,
director or trustee.
All of the transactions, relationships or arrangements listed
above were entered into, and payments were made or received by
us, in the ordinary course of business and on competitive terms.
Aggregate payments that were made to, or that we received from,
each of the relevant organizations, including any charitable
organization in which a non-management director served as an
executive officer, did not exceed the greater of $1 million
or 2% of that organizations consolidated gross revenues
for each of the most recent three completed fiscal years. The
Board has determined that these transactions, relationships and
arrangements are not material, do not create a material
relationship between American Greetings and any of
Messrs. Dunn, MacDonald, Merriman and Ratner, or
Drs. Cowen or Thornton and that the independent judgment of
these directors has not been and will not be compromised by such
transactions, relationships and arrangements.
In addition, based on the NYSE independence standards, the Board
determined that Messrs. Zev, Jeffrey and Morry Weiss are
not independent because they are executive officers of American
Greetings.
Board
Leadership Structure
We separate the roles of Chief Executive Officer and Chairman of
the Board in recognition of the differences between the two
roles. As Chief Executive Officer, Zev Weiss is responsible for
setting the strategic direction for the company and the
day-to-day
leadership and performance of the company. As the Chairman of
the Board, Morry Weiss provides guidance in such critical
functions as mergers and acquisitions and other strategic
initiatives, works with the Chief Executive Officer in
developing the companys long-range strategic plans,
provides guidance to the Chief Executive Officer and other
members of senior management, sets the agenda for the Board
meetings and presides over meetings of the full Board. Because
Mr. Morry Weiss, our Chairman, is not
independent, our Board has appointed Mr. Ratner
to be the presiding director
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at the executive sessions of the non-management
directors, as defined under the rules of the NYSE. The Board
believes that this provides an effective leadership model for
the company.
Board
Oversight of Risk
The Board, as a whole and also at the committee level, is
responsible for oversight of risks that could affect the
company. The Board, committees or both receive regular reports
from members of senior management on areas of material risk to
the company, including sales, operational, financial, legal and
regulatory, and strategic risks. The Audit Committee oversees
the companys enterprise risk assessment and risk
management policies. In addition, the Compensation and
Management Development Committee evaluates risks associated with
the companys compensation policies and practices, and
discusses these risks with the Audit Committee. The Board
focuses on the most significant risks facing the company and the
companys processes to enable the organization to identify,
manage and mitigate risks. Although the Board oversees the
companys risk management, company management is
responsible for
day-to-day
risk management processes. The company does not believes that
the Boards role in the oversight of risk has an effect on
the Boards leadership structure.
Board of
Directors and Committees
The Board met five times during fiscal 2011. The Board has a
standing Executive Committee, Audit Committee, Nominating and
Governance Committee, and Compensation and Management
Development Committee (which we also refer to herein as the
Compensation Committee). Each member of the Audit,
Nominating and Governance, and Compensation and Management
Development Committees is independent as defined under the
current listing standards of the NYSE.
Executive
Committee
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Morry Weiss (Chair)
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William E. MacDonald, III
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Jerry Sue Thornton
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Michael J. Merriman, Jr.
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Jeffrey Weiss
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Charles A. Ratner
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Zev Weiss
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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 held no meetings during fiscal 2011.
Audit
Committee
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William E. MacDonald, III (Chair)
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Jeffrey D. Dunn
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Scott S. Cowen
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Michael J. Merriman, Jr.
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The Board has determined that each Audit Committee member is
financially literate under the current listing standards of the
NYSE. The Board also determined that each of Mr. MacDonald
and Mr. Merriman qualify as an audit committee
financial expert as defined by the Securities and Exchange
Commission (SEC) rules. Shareholders should
understand that the designation of Mr. MacDonald and
Mr. Merriman as an audit committee financial
expert is a SEC disclosure requirement and that it does
not impose upon them any duties, obligations or liabilities that
are greater than those generally imposed on them as members of
the Audit Committee and the Board. In addition, under the
Sarbanes-Oxley Act of 2002 and the NYSE rules mandated by the
SEC, members of the Audit Committee must have no affiliation
with the issuer, other than their board seats, and receive no
compensation in any capacity other than as a director or
committee member. Each member of the Audit Committee meets this
additional independence standard applicable to Audit Committee
members of NYSE listed companies.
The Audit Committee is responsible for assisting the Board in
fulfilling its oversight responsibilities by:
(1) monitoring the integrity of our financial statements;
(2) monitoring the integrity of our auditing, accounting
and financial reporting processes generally; (3) monitoring
the independence and performance of our independent registered
public accounting firm and our internal audit department;
(4) monitoring our compliance with legal and regulatory
requirements; (5) reviewing the adequacy of and compliance
with our
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financial policies and procedures and systems of internal
control; (6) preparing the Audit Committee Report to be
included in this Proxy Statement; and (7) making regular
reports to the Board and keeping written minutes of its
meetings. The Audit Committee is also responsible for reviewing
and approving or ratifying transactions with related persons, as
described below in the Certain Relationships and Related
Transactions section of this Proxy Statement. The Audit
Committee has the sole authority to engage and replace the
independent registered public accounting firm. The Audit
Committee met eight times during fiscal 2011. The current
version of the Audit Committee charter is available on the
investors section of our Web site at
www.corporate.americangreetings.com.
Nominating
and Governance Committee
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Charles A. Ratner (Chair)
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Michael J. Merriman, Jr.
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William E. MacDonald, III
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Jerry Sue Thornton
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The purposes of the Nominating and Governance Committee are to
(1) assist the Board by identifying individuals qualified
to become Board members, and to recommend to the Board the
director nominees for each annual meeting of shareholders;
(2) review and recommend to the Board qualifications for
committee membership and committee structure and operations;
(3) recommend to the Board directors to serve on each
committee and a chair for such committee; (4) develop and
recommend to the Board a set of corporate governance policies
and procedures; and (5) lead the Board in its annual review
of the Boards performance. The Nominating and Governance
Committee met two times during fiscal 2011. A current version of
the Nominating and Governance Committee charter is available on
the investors section of our Web site at
www.corporate.americangreetings.com.
It is the policy of the Nominating and Governance Committee to
consider individuals recommended by shareholders for membership
on the Board. If a shareholder desires to recommend an
individual for membership on the Board, then that shareholder
must provide a written notice on or before January 14, 2012
to our Chairman, Chief Executive Officer or Secretary at
American Greetings Corporation, One American Road, Cleveland,
Ohio 44144, for consideration by the Committee for that
years election of directors at the Annual Meeting. It is
the policy of the Committee not to evaluate candidates
recommended by shareholders any differently from candidates
recommended from other sources.
The Nominating and Governance Committee determines, and reviews
with the Board on an annual basis, the desired skills and
characteristics for directors as well as the composition of the
Board as a whole. This assessment considers the nominees
qualification as independent under the listing standards of the
NYSE, as well as diversity, age, skill and experience in the
context of the needs of the Board. When the Nominating and
Governance Committee considers diversity, the Committee views
diversity in the broadest sense, including a persons age,
gender, race, national origin, education, professional
experience and differences in viewpoints and skills. The
Nominating and Governance Committee has not adopted a formal
policy with respect to diversity; however, the Board and the
Nominating and Governance Committee believe that it is essential
that the Board members represent diverse viewpoints and skills,
which contribute to a more effective decision-making process. In
considering candidates for the Board, the Nominating Committee
considers the entirety of each candidates credentials in
the context of these standards. The Committee does not assign
specific weights to particular criteria and no particular
criterion is necessarily applicable to all prospective director
nominees. American Greetings believes that the backgrounds and
qualifications of the directors, considered as a group, should
provide a significant composite mix of experience, knowledge and
abilities that will enhance the quality of the Boards
deliberations and decisions.
The biography of each current and nominated director set forth
below in Proposal One contains information regarding the
persons service as a director of our company, director
positions at publicly-held companies held currently or at any
time during the last five years, and the experiences,
qualifications, attributes or skills that caused the Nominating
and Governance Committee and the Board to determine that the
person should serve as a director for American Greetings.
The Nominating and Governance Committee will recommend
prospective Board members who have the highest personal and
professional integrity, who have demonstrated exceptional
ability and judgment and who the Committee believes will be
effective, in conjunction with the other members of the Board,
in collectively
7
serving the long-term interests of the shareholders. When
seeking candidates for the Board, the Committee may consider
candidates proposed by our Chairman, Chief Executive Officer or
shareholders and may also solicit suggestions from incumbent
directors, management and third-party search firms, although the
Board has not engaged a third-party search firm at this time.
Compensation
and Management Development Committee
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Scott S. Cowen (Chair)
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Charles A. Ratner
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Jeffrey D. Dunn
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Jerry Sue Thornton
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The Compensation and Management Development Committee of the
Board reviews and approves the compensation for our executive
officers generally and reviews and approves our executive and
employee compensation plans (including the plans for our named
executive officers identified in the Summary Compensation Table
in the Fiscal 2011 Information Concerning Executive Officers
section below and our other executive officers); reviews and
approves grants and awards to executive officers and other
participants under our equity-based compensation plans; and
oversees the annual evaluation of management. The Compensation
Committee is also responsible for producing the Report of the
Compensation and Management Development Committee included in
this Proxy Statement. The Compensation Committee met seven times
during fiscal 2011. The current version of the Compensation
Committees charter is available on the investors section
of our Web site at www.corporate.americangreetings.com.
Use of
Consultants
From time to time, the Compensation Committee uses outside
compensation consultants to work with the Compensation Committee
and management. The Compensation Committee has engaged Mercer
(US) Inc. (Mercer), a wholly owned subsidiary of
Marsh & McLennan Companies, Inc. (MMC), to
assist it in setting executive and non-employee director
compensation levels, designing and implementing incentive plans
for executives and non-employee directors, and providing
industry data and peer group pay practices to assist management
in making recommendations regarding the compensation of our
executive officers and non-employee directors. The industry data
and recommendations provided by Mercer were used as one of the
resources in making compensation decisions during fiscal 2011.
Mercers fees for executive compensation consulting to the
Compensation Committee in fiscal 2011 were $52,332. The use of
an independent consultant provides additional assurance that our
executive compensation programs are reasonable and consistent
with company objectives. Although management, particularly the
Senior Vice President of Human Resources, works closely with
Mercer, the consultant is ultimately accountable to the
Compensation Committee on engagements relating to the
compensation of our executive officers and our outside
directors. During fiscal 2011, Mercer periodically participated
in Compensation Committee meetings and advised the Compensation
Committee with respect to compensation trends and best
practices, plan design, and the reasonableness of individual
compensation awards. Additional information on the Compensation
Committees processes and procedures for consideration of
executive compensation is included in the Compensation
Discussion and Analysis section below, and for consideration of
non-employee director compensation is included in the
Director Compensation section below.
American Greetings and its subsidiaries also separately retain
Mercer and other affiliates of MMC to provide services and
products that are unrelated to the services provided to the
Compensation Committee on matters relating to the compensation
of our executive officers and non-employee directors (the
Unrelated Company Services). In fiscal 2011, the
Unrelated Company Services included such products and services
as: insurance coverage, including officer and director
insurance, group life insurance, workers compensation insurance
and salary continuance insurance;; motor vehicle, marine
transit, and corporate travel insurance; advisory and
administrative services with respect to employee pension plans;
and general purpose compensation surveys. During fiscal 2011, we
paid Mercer or other affiliates of MMC an aggregate of $120,061
for these Unrelated Company Services, which amount does not
include fees passed on by the affiliates of MMC to unrelated
third parties for payment of insurance premiums on policies for
which the MMC affiliate only provided brokerage or other
advisory services. The decisions to engage Mercer or other
affiliates of MMC for Unrelated Company Services in fiscal 2011
were made by employees of the company or its subsidiaries.
However, commencing in March 2010, the Compensation Committee
implemented a policy requiring that management receive the
Compensation Committees prior approval to engage a
compensation consultant or an affiliate thereof to provide
8
non-executive compensation services to the extent such
engagement, individually or in the aggregate, involves the
payment of fees to such consultant or affiliate in excess of
$50,000. Accordingly, the Compensation Committee approved in
advance the Unrelated Company Services provided to the company
by Mercer or other affiliates of MMC.
Mercer has advised us that none of its principals or employees
who provided advice to the Compensation Committee had any direct
or indirect involvement in providing the Unrelated Company
Services, or in the companys selection of, or negotiation
of arrangements with, Mercer or other affiliates of MMC to
provide such services. In addition, none of Mercers
principals or employees who provided advice to the Compensation
Committee received any direct or indirect compensation as a
result of Unrelated Company Services, other than to the extent
that employees of Mercer benefit from the overall success of MMC
and its affiliates generally. The Compensation Committee does
not believe that Mercers ability to provide it with
objective advice was impaired by the Unrelated Company Services
provided to the company and its affiliates.
In addition, American Greetings has practices and procedures for
ensuring the Compensation Committees compensation
consultant is independent and for minimizing potential conflicts
of interest including the following:
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The Compensation Committee has the authority to retain and
dismiss Mercer at any time;
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Mercer reports directly to the Compensation Committee and has
direct access to the Committee through the chairman;
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Each engagement of Mercer by the Compensation Committee is
documented in an engagement letter that includes a description
of the agreed upon services, fees and other matters considered
appropriate; and
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As described above, management must receive the Compensation
Committees prior approval to engage a compensation
consultant or an affiliate thereof to provide non-executive
compensation services to the extent such engagement,
individually or in the aggregate, involves the payment of fees
to such consultant or affiliate in excess of $50,000.
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Attendance
During fiscal 2011, each incumbent director attended 75% or more
of the aggregate number of meetings of the Board and the
respective committees on which he or she serves. We have
established a formal policy requiring director attendance at all
Board meetings (and meetings of committees of which the director
is a member), absent unusual circumstances. We expect our
directors to attend the annual meetings of shareholders (which
are usually held the same day as a meeting of the Board). Each
director attended the 2010 Annual Meeting of Shareholders.
Communications
to the Board of Directors
The Board believes that it is important for shareholders and
other interested parties to have a process to send
communications to the Board. Accordingly, shareholders and
interested parties who wish to communicate with the Board, an
individual director, the presiding director of non-management
director executive sessions, or the
non-management
or independent directors as a group can mail a letter to the
Board, individual director, presiding director, or group of
non-management directors (as applicable)
c/o Secretary,
American Greetings Corporation, One American Road, Cleveland,
Ohio 44144. The mailing envelope must contain a clear notation
indicating that the enclosed letter is a Board
Communication or Director Communication. All
such letters must identify the author and clearly state the
intended recipients. The Secretary will make copies of all such
letters and circulate them to the appropriate director or
directors; however, the Secretary will not forward the
communication if it is primarily commercial in nature or if it
relates to an improper or irrelevant topic. The individual
directors are not spokespeople for American Greetings and people
should not expect a response or reply to any communication.
Executive
Sessions
In accordance with NYSE rules, non-management directors meet in
regularly scheduled executive sessions without management.
Mr. Ratner has been appointed as the presiding director by
the non-management directors to preside at these sessions.
9
PROPOSAL ONE
ELECTION
OF DIRECTORS
Pursuant to our Amended and Restated Code of Regulations, the
Board comprises three classes of directors, each class
consisting of not less than three directors and having a
three-year term. In accordance with our Amended and Restated
Code of Regulations, the Board has fixed the board size at nine
(9) members, with each Class having three
(3) directors. Class I members are to be elected at
the Annual Meeting.
It is proposed that the shareholders re-elect the following
nominees for Class I directors: Jeffrey D. Dunn, Michael J.
Merriman, Jr., and Morry Weiss. The term of office to be
served by each nominee in Class I, if elected, will be
three years, until the 2014 Annual Meeting of Shareholders, or
until his successor is duly elected and qualified. Each of these
nominees for Class I director has agreed to stand for
election.
If for any reason any of the nominees is not a candidate when
the election occurs (which is not expected), the Board expects
that proxies will be voted for the election of a substitute
nominee designated by the Nominating and Governance Committee;
provided, however, proxies cannot be voted for a greater number
of persons than the number of nominees named.
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.
The Board
unanimously recommends that you vote FOR all of the
following nominees.
The biography of each of the nominees and continuing directors
below contains information regarding the individuals
service as a director for American Greetings, business
experience, and director positions at other publicly-traded
companies that the individual holds currently or has held at any
time during the last five years. In addition, the experiences,
qualifications and attributes or skills that caused the Board to
determine that the person should serve as a director for the
company are also included.
Nomination
for Election to Term Ending 2014
(Class I)
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Jeffrey D. Dunn (56) Class I
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Director (2007), member of the Audit Committee and the Compensation and Management Development Committee
Mr. Dunn is President and Chief Executive Officer and director of HIT Entertainment Limited (a childrens entertainment company), a position he has held since February 2008. Mr. Dunn was formerly a private investor, and was employed by MTV Networks (an entertainment company and a division of Viacom, Inc., a publicly-held company) as Chief Operating Officer of the Nickelodeon Networks Group and the President of Nickelodeon Film Enterprises from 1993 to 2006. Prior to that time, Mr. Dunn was employed as Director of Marketing, Arthur D. Little (a publicly-held management consulting firm), from 1991 to 1993, Director of Marketing, Bank of Boston from 1986 to 1991, and Associate International Director, Time Magazine and General Manager, Discover Magazine from 1977 to 1986. He is a director of a number of privately-held companies, including Vlingo Corporation.
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The Board chose to nominate Mr. Dunn as a director because of
his expertise in the areas of childrens entertainment,
intellectual property, digital content and licensing as well as
his international business experience. In addition, during his
career, among other significant achievements, Mr. Dunn
implemented business strategies for the successful development
of worldwide childrens entertainment brands and other
intellectual property rights, which has provided the Board a
valuable resource on a variety of matters, including the
marketing, development and merchandising of the companys
entertainment properties, such as Care Bears and Strawberry
Shortcake.
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Michael J. Merriman, Jr. (55) Class I
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Director (2006), member of the Audit Committee, Nominating and Governance Committee and Executive Committee
Mr. Merriman has been an operating advisor with Resilience Capital Partners, LLC (a private equity firm), since July 1, 2008. From November 2006 until its sale in November 2007, Mr. Merriman served as Chief Executive Officer of The Lamson & Sessions Co. (a publicly-held manufacturer of thermoplastic conduit, fittings and electrical switch and outlet boxes). Prior to joining Lamson & Sessions, Mr. Merriman served as the Senior Vice President and Chief Financial Officer of American Greetings from September 2005 until November 2006. He served as the President and Chief Executive Officer of Royal Appliance Mfg. Co. (a publicly-held manufacturer and marketer of Dirt Devil vacuum cleaners) from 1995 until April 2004, was its Chief Financial Officer from 1992 to 1995, and served on the board of directors from 1993 to 2004. Mr. Merriman has served as a director of RC2 Corporation (a publicly-held manufacturer of pre-school toys and infant products) since 2004, Nordson Corporation (a publicly-held manufacturer of equipment used for precision dispensing, testing and inspection, surface preparation and curing) since 2008, and OMNOVA Solutions Inc. (a publicly-held innovator of emulsion polymers, specialty chemicals, and decorative and functional surfaces) since 2008. Mr. Merriman is also a director of Boys Hope Girls Hope of Northeast Ohio (a non-profit organization), True Hero, Inc. (a non-profit organization) and John Carroll University.
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The Board chose to nominate Mr. Merriman as a director because
of his financial acumen, his significant public accounting
experience, his service on boards of directors of other
publicly-traded companies and his product development
expertise. Mr. Merriman has significant finance, financial
reporting and accounting expertise and was formerly a certified
public accountant, which provides the Board with valuable
expertise and qualifies him as a financial expert on
the Audit Committee, as described above under the section
Audit Committee. In addition, because of his wide
range of management experience, including as a former partner at
Arthur Andersen & Co. and his service as chief financial
officer of American Greetings, Mr. Merriman provides valuable
insight into the companys operations as well as its
interactions with investors and financial analysts.
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Morry Weiss (71) Class I
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Director (1971), Chairman of the Board of Directors, Chair of the Executive Committee
Mr. Weiss joined American Greetings in 1961 and has had various responsibilities with American Greetings including Group Vice President of Sales, Marketing and Creative. In June 1978, Mr. Weiss was appointed President and Chief Operating Officer. From October 1987 until June 1, 2003, Mr. Weiss was Chief Executive Officer of American Greetings. In February 1992, Mr. Weiss became our Chairman. Mr. Weiss serves as a member of the advisory board of Primus Venture Partners (equity investor in companies requiring growth capital). Mr. Weiss served as a director of National City Corporation (a publicly-held financial holding company) from 1991 until its sale in December 2008. Mr. Weiss participates in a number of professional, educational and non-profit organizations, including as Chairman of the Yeshiva University Board of Trustees and as a trustee of the Cleveland Clinic Foundation. Morry Weiss is the father of Jeffrey Weiss, a director and our President and Chief Operating Officer; the father of Zev Weiss, a director and our Chief Executive Officer; and the brother of Erwin Weiss, our Senior Vice President, Enterprise Resource Planning.
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The Board chose to nominate Mr. Weiss as a director and Chairman
of the Board of Directors because of his 50 years of
extensive experience in the social expressions industry,
holding positions of ever-increasing executive responsibility at
the company, including accomplished roles as American
Greetings President, Chief Operating Officer, and Chief
Executive Officer. As a member of our companys founding
family and member of senior management for over 30 years,
Mr. Weiss has extensive knowledge of our industry as well as our
business and history that provides the Board valuable insight
into our operations and strategies. In addition, Mr. Weiss has
served on various boards of directors of other companies and
organizations, providing the Board with an array of valuable
perspectives and insights.
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11
Continuing
Directors with Term Expiring in 2012
(Class II)
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Charles A. Ratner (69) Class II
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Director (2000), Chair of the Nominating and Governance Committee, member of the Compensation and Management Development Committee and Executive Committee
Mr. Ratner is the Chief Executive Officer and President of Forest City Enterprises, Inc. (a publicly-held conglomerate corporation engaged in real estate development, sales, investment and construction), positions he has held for 15 and 17 years, respectively, and has been a member of its board of directors since 1972. Mr. Ratner has served as a director of RPM International, Inc. (a publicly-held specialty coatings manufacturer) since 2005. In addition, Mr. Ratner participates in a number of professional, civic, educational, health care, and non-profit organizations, including as a board member of The Greater Cleveland Partnership, University Hospitals Case Medical Center, United Jewish Communities, United Israel Appeal, Mandel Associated Foundations, David and Inez Myers Foundation, and the Musical Arts Association as well as on the Board of Governors for The National Association of Real Estate Investment Trusts and the Jewish Agency for Israel, on the Executive Committee for United Way Services of Greater Cleveland and as a Trustee-for-Life for the Jewish Community Federation of Cleveland. Mr. Ratner has been a board member for the Jewish Education Center of Cleveland (JECC) for more than 15 years.
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The Board selected Mr. Ratner as a director because of his
extensive executive management experience, with a particular
emphasis in real estate development, along with particular
strengths with respect to leadership, management and corporate
governance skills gained from more than 40 years of senior
management experience at Forest City Enterprises as well as his
experience on other boards of directors. In addition,
Mr. Ratner has acquired a deep understanding of our
products and our company during his more than ten years of
service on our board and provides the board a valuable
perspective as a member of the boards of several prominent local
non-profit organizations.
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Jerry Sue Thornton (64) Class II
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Director (2000), member of the Nominating and Governance Committee, Compensation and Management Development Committee and Executive Committee
Dr. Thornton is the President of Cuyahoga Community College, Cleveland, Ohio (the largest community college in northeast Ohio), a position she has held since 1992. Dr. Thornton served as a director of National City Corporation from 2004 until its sale in December 2008. Dr. Thornton has served as a director of Applied Industrial Technologies, Inc. (a publicly-held distributor of industrial products and services) since 1994 and RPM International, Inc. since 1999. Dr. Thornton also serves on the board of directors of American Family Insurance (a privately-held insurance company) and participates in a number of professional, civic, educational, health care, and other non-profit organizations, including as a board member of Playhouse Square Foundation, Rock and Roll Hall of Fame and Museum Cleveland and New York, University Hospitals Health System, United Way Services of Greater Cleveland, The Campus District, The Greater Cleveland Partnership and The Cleveland Museum of Art.
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The Board selected Dr. Thornton as a director because of
her extensive management experience and her experience serving
on boards of directors of public companies. In addition, as the
president of Cuyahoga Community College, Dr. Thornton has
demonstrated management expertise and is a recognized leader in
the local community, which, among other things, provides the
board a valuable perspective on engagement with the public
sector and the communities in which we operate.
Dr. Thornton also provides the Board a valuable perspective
as a member of the boards of several local non-profit
organizations.
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Jeffrey Weiss (47) Class II
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Director (2003), member of the Executive Committee
Mr. Weiss is President and Chief Operating Officer of American Greetings, a position he has held since June 2003. Prior to becoming President and Chief Operating Officer, Mr. Weiss has had various responsibilities with American Greetings since joining in 1988, including most recently, Executive Vice President, North American Greeting Card Division of American Greetings from March 2000 until June 2003. Mr. Weiss is a board member of the Cleveland Institute of Art (professional art college). Jeffrey Weiss is the son of Morry Weiss, our Chairman of the Board; the brother of Zev Weiss, a director and our Chief Executive Officer; and the nephew of Erwin Weiss, our Senior Vice President, Enterprise Resource Planning.
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The Board selected Mr. Weiss as a director because of his
extensive executive management and leadership skills, together
with his significant knowledge of the social expressions
industry, gained through his 20-plus years of experience at the
company. In addition, as our President and Chief Operating
Officer, his day-to-day exposure to the companys
activities provides Mr. Weiss with an exhaustive understanding
of our operations and an in-depth knowledge of our corporate
strategies.
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Continuing
Directors with Term Expiring in 2013
(Class III)
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Scott S. Cowen (64) Class III
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Director (1989), Chair of the Compensation and Management Development Committee, member of the Audit Committee
Dr. Cowen is President and Seymour S. Goodman Professor of Management and Professor of Economics, Tulane University, a position he has held since 1998. 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 has served as a director of Forest City Enterprises, Inc. since 1989; and Newell Rubbermaid Inc. (a publicly-held consumer home products company) since 1999. He was a director of Jo-Ann Stores, Inc. (a publicly-held specialty store retailer) from 1987 until its sale in 2011. Dr. Cowen has been a member of the Board of Overseers of TIAA-CREF (a private financial services company) since 2010. Dr. Cowen participates as a board member of a number of civic organizations, including as Chair of the Southeast Louisiana Regional Airport Authority and as a member of the New Orleans Business Council, New Orleans Public Belt Railroad and Greater New Orleans Inc.
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The Board selected Dr. Cowen because of his breadth of
knowledge in economics, finance and management, extensive
experience in the public sector and his cumulative service on
boards of directors in industries that are relevant to our
operations. As the president of Tulane University, a national
research university, Dr. Cowen also brings valuable
management and leadership experience. In addition to the
leadership skills he possesses as a result of his work at Tulane
University, Dr. Cowen has gained extensive crisis
management experience from his leadership in the rebuilding of
Tulane following its devastation by Hurricane Katrina. He also
played a leadership role in the rebuilding of New Orleans
following Hurricane Katrina, and in major New Orleans civic and
business organizations, including chairing the Southeast
Louisiana Regional Airport Authority and a committee charged
with reforming and rebuilding the New Orleans public schools
following Hurricane Katrina.
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William E. MacDonald, III (64) Class III
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Director (2007), Chair of the Audit Committee, member of the Executive Committee and Nominating and Governance Committee
Mr. MacDonald was Vice Chairman and member of the Office of the Chairman of National City Corporation from 2001 until his retirement on December 31, 2006. Prior to that, Mr. MacDonald held various management positions within National City over more than 30 years including Senior Executive Vice President of National City Corporation and President and Chief Executive Officer of National Citys Ohio Bank. Mr. MacDonald has served as a director of Lincoln Electric Holdings, Inc. (a publicly-held manufacturer and reseller of welding and cutting products) since 2007. He was a director of The Lamson & Sessions Co. from 2006 to 2007 and MTC Technologies, Inc. (a publicly-held provider of technical and professional services and equipment integration for the U.S. military and intelligence agencies) from 2002 to 2007, when in each case the boards were dismantled as a result of divestiture. Mr. MacDonald has served as a director of Segmint Inc. (a privately held technology-based company helping financial institutions and their marketing partners build digital customer relationships) since 2008. Mr. MacDonald participates as a board member of a number of civic, health care and other non-profit organizations including The Cleveland Clinic Foundation and is Trustee Emeritus of The Diversity Center and WVIZ/PBS and 90.3 Ideastream.
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The Board selected Mr. MacDonald because of his valuable
experience and insights into banking and capital markets gained
during his thirty-eight year career in increasingly significant
management positions with National City Corporation, one of the
nations leading financial services institutions. Mr.
MacDonalds experience in leading a large corporate
organization, structuring complex financial solutions, and his
expertise in economic issues provide the Board with valuable
expertise and qualifies him as a financial expert on
the Boards Audit Committee, as described above under the
section Audit Committee. In addition, Mr.
MacDonalds service as a director on boards of other public
companies has enhanced his understanding in areas of executive
management, corporate governance, strategic planning and
executive compensation, which has made him a valuable resource
to the company. Mr. MacDonald also brings a valuable
perspective as a member of the boards of several prominent local
non-profit organizations.
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Zev Weiss (44) Class III
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Director (2003), member of the Executive Committee
Mr. Weiss became Chief Executive Officer of American Greetings in June 2003. Prior to becoming Chief Executive Officer, Mr. Weiss had various responsibilities with American Greetings since joining in 1992, including most recently, Executive Vice President, A.G. Ventures and Enterprise Management from December 2001 to June 2003. He is currently on the board of United Way Services of Greater Cleveland and is the 2011-2012 Campaign Co-Chair. Mr. Weiss serves as President of the Board of Fuchs Mizrachi Day School. Zev Weiss is the son of Morry Weiss, our Chairman of the Board; the brother of Jeffrey Weiss, a director and our President and Chief Operating Officer; and the nephew of Erwin Weiss, our Senior Vice President, Enterprise Resource Planning.
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The Board selected Mr. Weiss because of his extensive executive
management and leadership skills gained through his
18 years of experience at the company. Mr. Weiss has
extensive knowledge of the social expressions industry in
general and the companys business in particular and as our
Chief Executive Officer, Mr. Weisss day-to-day leadership
of American Greetings gives him critical insights into our
operations and strategies, and provides an important link
between management and our Board, facilitating the Boards
ability to effectively perform its oversight function with the
benefit of managements perspective on the business.
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14
PROPOSAL 2
APPROVING
THE SECOND AMENDMENT TO THE
COMPANYS
2007 OMNIBUS INCENTIVE COMPENSATION PLAN
At the annual meeting held on June 22, 2007, the
shareholders of American Greetings adopted the American
Greetings Corporation 2007 Omnibus Incentive Compensation Plan
(the Omnibus Incentive Plan) pursuant to which
2,800,000 Class A common shares and 700,000 Class B
common shares were reserved for issuance to key employees,
non-employee directors and consultants of American Greetings and
its subsidiaries. At the annual meeting held on June 26,
2009, the shareholders approved an amendment to the Omnibus
Incentive Plan to increase the number of shares authorized for
issuance under the Omnibus Incentive Plan by an additional
1,600,000 Class A common shares and 400,000 Class B
common shares (the First Amendment to Omnibus Incentive
Plan). On May 1, 2011, the Compensation Committee of
the Board adopted, subject to shareholder approval, an amendment
to the Omnibus Incentive Plan, as amended, to increase the
number of shares authorized for issuance under the Omnibus
Incentive Plan by an additional 1,200,000 Class A common
shares and 100,000 Class B common shares (the Second
Amendment to Omnibus Incentive Plan). The Board has
directed that the proposal to approve the Second Amendment to
Omnibus Incentive Plan be submitted to our shareholders for
their approval at the Annual Meeting. We are also seeking
approval of the amendment (1) so that the compensation
attributable to grants and other payments made under the Omnibus
Incentive Plan may qualify for exemption from the $1,000,000
deduction limit under Section 162(m) of the Internal
Revenue Code (see discussion of Section 162(m) under the
Federal Income Tax Consequences section below);
(2) in order for incentive stock options granted under the
Omnibus Incentive Plan to meet the requirements of the Internal
Revenue Code; and (3) in order to satisfy the NYSE
corporate governance listing standards.
The Board believes that the Omnibus Incentive Plan is an
integral part of our compensation philosophy and programs. Our
ability to draw top quality individuals to positions is material
to our success, and the Board has concluded that our ability to
achieve these objectives has been enhanced by the ability to
make awards under the Omnibus Incentive Plan. In addition, the
Board believes that the interests of American Greetings and its
shareholders will be advanced by continuing to offer our
employees, officers and non-employee directors the opportunity
to acquire or increase their proprietary interests in American
Greetings. Accordingly, an increase in the number of shares
available under the Omnibus Incentive Plan was approved to
ensure that sufficient shares of American Greetings Class A
and Class B common shares are available so that the company
may continue to attract, retain and motivate top quality
management, employees, officers and non-employee directors. As
of May 4, 2011, there were 533,483 Class A common
shares and 233,356 Class B common shares remaining for
future awards, which would increase to 1,733,483 Class A
common shares and 333,356 Class B common shares if the
Second Amendment to Omnibus Incentive Plan is approved.
The material terms of the Omnibus Incentive Plan are
summarized below. This summary of the Omnibus Incentive Plan is
not intended to be a complete description of the Omnibus
Incentive Plan and is qualified in its entirety by the actual
text of the Omnibus Incentive Plan, as amended, attached as
Exhibit A.
Material
Features of the Omnibus Incentive Plan
General. The Omnibus Incentive Plan
provides that awards may be in any of the following forms:
(1) incentive stock options; (2) nonstatutory stock
options (incentive stock options and nonstatutory stock options
are together referred to as options);
(3) appreciation rights; (4) share awards;
(5) restricted shares; (6) deferred shares (or RSUs);
(7) performance bonuses; (8) performance shares;
(9) directors shares; (10) performance units; and
(11) dividend equivalents.
Dividend equivalents may be granted in connection with share
awards (other than options and appreciation rights). Awards
under the Omnibus Incentive Plan may be settled in cash, our
common shares or a combination of cash and shares, as provided
in the terms of each award agreement.
Subject to adjustment in certain circumstances as described
below, the Omnibus Incentive Plan, as amended by the First
Amendment thereto, authorizes up to 4,400,000 Class A
common shares and 1,100,000
15
Class B common shares. If approved, the Second Amendment to
Omnibus Incentive Plan would increase this to 5,600,000
Class A common shares and 1,200,000 Class B common
shares. Shares subject to grants will become available again for
purposes of the Omnibus Incentive Plan: (1) if and to the
extent options and appreciation rights granted under the Omnibus
Incentive Plan terminate, expire or are cancelled, forfeited,
exchanged or surrendered after the effective date of the Omnibus
Incentive Plan without being exercised; or (2) if any share
awards or dividend equivalents are forfeited, terminated or
otherwise not paid in full after the effective date of the
Omnibus Incentive Plan. In addition, any portion of an award
that is payable only in cash pursuant to the terms of the
applicable award agreement will be immediately available again
for purposes of the Omnibus Incentive Plan.
The Omnibus Incentive Plan provides that the maximum aggregate
number of common shares, or its equivalent, that can be the
subject of awards made to an individual during any fiscal year
is 500,000 Class A and 500,000 Class B common shares,
but not to exceed 500,000 common shares collectively, subject to
adjustment as described below (the Individual
Limit). In addition, the number of performance shares and
units awarded to an individual may not exceed an aggregate value
of $5,000,000 as of the grant date (determined based on the fair
market value of our Class A common shares as of the grant
date).
Where two or more awards are granted in relation to each other
so that the exercise and payment of one award automatically
affects the number of shares that may be issued in connection
with the exercise of the related award, only the maximum amount
that can be issued in connection with both related awards in the
aggregate will be counted against the number of shares reserved
for issuance under the plan.
If approved by the shareholders, the Second Amendment to Omnibus
Incentive Plan will become effective as of May 1, 2011, the
date it was approved by the Compensation and Management
Development Committee of our Board.
Management. The Omnibus Incentive Plan
is managed and interpreted by the Committee. Except
to the extent required by law, the Committee means the Board or
the Boards Compensation and Management Development
Committee, or such other committee or designee appointed by the
Board or the Committees delegate. The Committee has the
authority to (1) determine the individuals to whom grants
will be made under the Omnibus Incentive Plan;
(2) determine the type, size and terms of the grants;
(3) determine the time when grants will be made and the
duration of any applicable exercise or restriction period,
including the criteria for exercisability and the acceleration
of exercisability; (4) amend the terms of any previously
issued grant, subject to the limitations described below;
(5) adopt guidelines separate from the Omnibus Incentive
Plan that set forth the specific terms and conditions for grants
under the Omnibus Incentive Plan; and (6) deal with any
other matters arising under the Omnibus Incentive Plan. The
determinations of the Committee are made in its sole discretion
and are final, binding and conclusive. The Compensation and
Management Development Committee presently consists of Scott S.
Cowen, Jeffrey D. Dunn, Charles A. Ratner and Jerry Sue
Thornton, each of whom is a non-employee director of American
Greetings.
Day-to-day
administrative functions of the Omnibus Incentive Plan are
performed by our employees. Moreover, the Committee may delegate
to our officers or managers the authority to grant awards under
the Omnibus Incentive Plan from a preauthorized pool of shares,
provided such grants may only be made to individuals authorized
to receive awards under the Omnibus Incentive Plan.
Eligibility for Participation. Key
employees (including executive officers and members of the
Board), non-employee directors and consultants of American
Greetings and our subsidiaries selected by the Committee are
eligible for grants under the Omnibus Incentive Plan. As of
May 4, 2011, approximately 375 employees and six
non-employee directors are eligible to receive grants under the
Omnibus Incentive Plan.
Types of Awards. The Omnibus Incentive
Plan provides that awards may be in any of the following forms:
Stock Options. The Committee may
grant options intended to qualify as incentive stock options
within the meaning of Section 422 of the Internal Revenue
Code or so-called nonstatutory stock options that
are not intended to so qualify or any combination of incentive
stock options and nonstatutory stock options. Anyone eligible to
participate in the Omnibus Incentive Plan may receive a grant of
nonstatutory stock
16
options. Only our employees may receive a grant of incentive
stock options. No more than 4,400,000 Class A common shares
and 1,100,000 Class B common shares may be issued as
incentive stock options under the Omnibus Incentive Plan, as
amended. If approved, the Second Amendment to Omnibus Incentive
Plan would increase this to 5,600,000 Class A common shares
and 1,200,000 Class B common shares.
The Committee fixes the exercise price per share for options on
the date of grant. The exercise price of any incentive stock
option granted under the Omnibus Incentive Plan will be equal to
or greater than the fair market value (the closing price of our
Class A common shares as reported on the NYSE) of the
underlying common shares on the date of grant.
The Committee determines the term of each option; provided,
however, that the term may not exceed ten years from the date of
grant. The vesting period for options commences on the date of
grant and ends on such date as is determined by the Committee,
in its sole discretion, which is specified in the grant letter.
Options may be exercised while the participant is employed by or
providing service to us or within a specified period of time
after termination of such employment or service, as determined
by the Committee. A participant may exercise an option by
delivering notice of exercise to us or our designated agent. The
participant may pay the exercise price and any withholding taxes
for the option in several ways: (1) in cash or by check;
(2) by delivering common shares already owned by the
participant and having a fair market value on the date of
exercise equal to the exercise price or through attestation to
ownership of such shares; (3) with respect to Class A
common shares by delivery of a properly executed notice together
with irrevocable instructions to a broker to promptly deliver to
us the amount of sale proceeds to pay the exercise price and
related withholding taxes on the settlement date that occurs
after the date specified in the notice of exercise;
(4) with respect to Class B common shares, through
attestation of the ability to pay the exercise price followed by
immediate tendering of such shares to us and our immediate
repurchase of such shares in accordance with our amended and
restated articles of incorporation; or (5) by such other
method as the Committee may approve, to the extent permitted by
applicable law. The Committee may provide that an option will be
substituted with an appreciation right that will be subject to
the same number of underlying shares as the substituted option.
Appreciation Rights. The
Committee may grant appreciation rights to anyone eligible to
participate in the Omnibus Incentive Plan. Appreciation rights
may be granted in connection with, or independent of, other
awards. Upon exercise of an appreciation right, the participant
will receive an amount equal to the excess of the fair market
value of our common shares on the date of exercise over the base
amount set forth in the grant letter. Such payment to the
participant will be in cash, in common shares, or in a
combination of cash and common shares, as determined by the
Committee. The Committee will determine the period when
appreciation rights vest and become exercisable. Appreciation
rights may be exercised while the participant is employed by or
providing service to us or within a specified period of time
after termination of such employment or service, as determined
by the Committee.
Restricted Shares. The Committee
may grant restricted share awards to anyone eligible to
participate in the Omnibus Incentive Plan. The Committee may
require that participants pay consideration for the share awards
and may impose restrictions on the share awards (referred to in
the Omnibus Incentive Plan as restricted shares). If
restrictions are imposed on share awards, the Committee will
determine whether they will lapse over a period of time or
according to such other criteria as the Committee determines
appropriate. The Committee determines the number of common
shares subject to the grant of share awards and the other terms
and conditions of the grant. The Committee will determine to
what extent, and under what conditions, a participant will have
the right to vote common shares and to receive dividends or
other distributions paid on such shares during the restriction
period. The Committee may determine that a participants
entitlement to dividends or other distributions with respect to
share awards will be subject to the achievement of performance
goals or other conditions.
Deferred Shares. The Committee
may grant deferred share awards, which we refer to as
RSUs. Each grant of an RSU constitutes the promise
to deliver shares of common stock to the participant in
consideration of the performance of services, but subject to the
fulfillment of such conditions during the applicable deferral
period as the Committee may specify. A grant of an RSU may
require the participant to pay consideration that is more or
less than the fair market value per share on the date of grant.
Unless otherwise determined by the
17
Committee, each RSU grant will be subject to a deferral period
of not less than one year. During the deferral period, the
participant will have no right to transfer any rights under his
or her award, will have no rights of ownership in the RSUs and
will have no right to vote the shares subject to the RSUs. The
Committee may, however, authorize the payment of dividend
equivalents on such shares on either a current, deferred, or
contingent basis, either in cash or in additional common shares.
Performance Units. The Committee
may grant performance units to anyone eligible to participate in
the Omnibus Incentive Plan. Performance units may be granted in
connection with, or independent of, other awards. Each
performance unit provides the participant with the right to
receive an amount based on the value of a common share if
specified performance goals are met. The Committee determines
the number of performance units that will be granted, the
performance goals, the target amount that will be paid, and the
other terms and conditions applicable to the performance shares.
Payments with respect to performance units will be made in cash,
in common shares, or in a combination of cash and common shares,
as determined by the Committee.
Performance Shares. The
Committee may grant performance shares to anyone eligible to
participate in the Omnibus Incentive Plan. Performance shares
may be granted in connection with, or independent of, other
awards. Each performance share provides the participant with the
right to receive a common share or an amount based on the value
of a common share, if specified performance goals are met. The
Committee determines the number of performance shares that will
be granted, the performance goals, the target amount that will
be paid, and the other terms and conditions applicable to the
performance shares. Payments with respect to performance shares
will be made in cash, in common shares, or in a combination of
cash and common shares, as determined by the Committee.
Other Share Awards. The
Committee may grant other types of share awards that would not
otherwise constitute options, appreciation rights, deferred
shares, restricted shares, performance shares or dividend
equivalents. The Committee may grant other share awards to
anyone eligible to participate in the Omnibus Incentive Plan.
These grants will be based on or measured by common shares, and
will be payable in cash, in common shares, or in a combination
of cash and common shares. The terms and conditions for these
grants will be determined by the Committee.
Directors Shares. Directors may
elect to receive Class A or Class B common shares in
lieu of any fees owed to them for services performed while on
the Board. Such shares shall be in an amount equal in value to
such fees, based on the closing price of our Class A common
shares reported on the NYSE on the last trading day of the
calendar quarter immediately prior to the payment of such fees.
Directors who elect to receive shares in lieu of fees may also
elect, pursuant to our Outside Directors Deferred
Compensation Plan, to defer the receipt of such shares for a
period specified in such plan. Shares reserved for issuance
under the Omnibus Incentive Plan will be used to satisfy our
obligation to deliver director shares, including deferred shares
and any dividend equivalents accrued on deferred shares,
following the effective date of the Omnibus Incentive Plan.
Performance Bonus. The Committee
may grant a performance bonus in cash or shares to participants
in incentive compensation plans maintained by us, including the
American Greetings Key Management Annual Incentive Plan. These
grants will be payable in cash, in common shares, or in a
combination of cash and common shares. The Committee will decide
whether a performance bonus will become payable if specified
performance goals or conditions are met.
Dividend Equivalents. The
Committee may provide dividend equivalents in share awards
(other than options or appreciation rights), which permit the
grantee to receive with respect to shares subject to an award
the equivalent value of dividends paid on our common shares.
Dividend equivalents are payable in cash or common shares and
may be paid currently or accrued as contingent obligations.
Dividend equivalents may accrue interest. The terms and
conditions of dividend equivalents are determined by the
Committee.
Qualified Performance-Based
Compensation. The Omnibus Incentive Plan
permits the Committee to impose and specify objective
performance goals that must be met with respect to awards under
the Omnibus Incentive Plan. The Committee will determine the
performance periods for the performance goals. Forfeiture of all
or part of any such grant will occur if the performance goals
are not met, as determined by the Committee. Prior to, or soon
after the beginning of, the performance period, the Committee
will establish in
18
writing the performance goals that must be met, the applicable
performance periods, the amounts to be paid if the performance
goals are met, and any other conditions.
The performance goals, to the extent designed to meet the
requirements of Section 162(m) of the Internal Revenue
Code, will be based on one or more of the following measures:
revenue; gross margin; product line contribution; operating and
other expenses; operating earnings; earnings before interest,
taxes, depreciation and amortization; earnings before interest
and taxes; pre-tax or after-tax profits; net income; earnings
per share; cash flow; productivity; return on assets; return on
capital; return on equity; cash flow/net assets; debt/capital
ratio; return on net capital employed; sales growth; stock price
appreciation; or total shareholder return (share appreciation
plus dividends as if reinvested), and may be absolute in their
terms or measured against or in relationship to changes from
period to period or against or in relationship to other
companies comparably, similarly or otherwise situated. The
foregoing measures may be based on the employees business
unit or the performance of American Greetings or American
Greetings subsidiaries independently or as a whole, or a
combination of the foregoing.
Deferrals. The Committee may permit or
require participants to defer receipt of the payment of cash or
the delivery of common shares that would otherwise be due to the
participant in connection with a grant under the Omnibus
Incentive Plan. The Committee will establish the rules and
procedures applicable to any such deferrals.
Adjustment Provisions. If there is any
change in the number or kind of common shares by reason of:
(1) a stock dividend, spinoff, recapitalization, stock
split, or combination or exchange of shares; (2) a merger,
reorganization or consolidation; (3) a recapitalization or
change in par value; or (4) any other extraordinary or
unusual event affecting the outstanding common shares as a
class, or if the value of outstanding common shares is
substantially reduced as a result of a spin-off,
split-up or
American Greetings payment of an extraordinary dividend or
distribution, the number of common shares available for grants,
the limit on the number of common shares for which any
individual may receive pursuant to grants in any year, the
number of shares covered by outstanding grants, the kind of
shares to be issued or transferred under the Omnibus Incentive
Plan, and the price per share or the applicable market value of
such grants will be appropriately adjusted by the Committee to
reflect any increase or decrease in the number or kind of issued
common shares in order to preclude, to the extent practicable,
the enlargement or dilution of the rights and benefits under
such grants.
Foreign Participants. If any individual
who receives a grant under the Omnibus Incentive Plan is subject
to taxation in countries other than the United States, the
Omnibus Incentive Plan provides that the Committee may make
grants to such individuals on such terms and conditions as the
Committee determines appropriate to comply with the laws of the
applicable countries.
Repricing of Options and Reloads. The
Omnibus Incentive Plan includes a restriction providing that,
without shareholder approval, neither the Committee nor the
Board can (1) authorize any option grant to provide for
reload rights, the automatic grant of options to the
participant upon the exercise of options using shares or other
equity, or (2) amend or replace options previously granted
under the Omnibus Incentive Plan in a transaction that
constitutes a repricing as that term is defined
under the NYSE corporate governance listing standards.
Adjustments to the exercise price or number of common shares
subject to an option to reflect the effects of a stock split or
other extraordinary corporate transaction will not constitute a
repricing.
Amendment and Termination of the Omnibus Incentive
Plan. The Board or the Compensation and
Management Development Committee may amend or terminate the
Omnibus Incentive Plan at any time, subject to shareholder
approval if such approval is required under any applicable laws
or stock exchange requirements. No grants may be issued under
the Omnibus Incentive Plan after February 12, 2017.
The last sales price of our Class A common shares on
May 6, 2011 was $24.01 per share as reported on the NYSE.
There is no public market for our Class B common shares.
New
Omnibus Incentive Plan Benefits
It is not possible to determine specific amounts that may be
awarded in the future under the Omnibus Incentive Plan, as
amended, because the grants will be discretionary.
19
Our awards of restricted stock units and our cash incentive
compensation payments (under the Key Management Annual Incentive
Plan) are not subject to shareholder approval of the proposed
amendment to the Omnibus Incentive Plan. Please refer to the
Compensation Discussion and Analysis and Fiscal 2011 Information
Concerning Executive Officers sections of this Proxy Statement
for information regarding those awards.
Federal
Income Tax Consequences
The federal income tax consequences arising with respect to
awards granted under the Omnibus Incentive Plan will depend on
the type of the award. The following provides only a general
description of the application of federal income tax laws to
certain awards under the Omnibus Incentive Plan. This discussion
is intended for the information of shareholders considering how
to vote at the Annual Meeting and not as tax guidance to
participants in the Omnibus Incentive Plan, as the consequences
may vary with the types of awards made, the identity of the
recipients and the method of payment or settlement. The summary
does not address the effects of other federal taxes (including
possible golden parachute excise taxes) or taxes
imposed under state, local, or foreign tax laws.
From the recipients standpoint, as a general rule,
ordinary income will be recognized at the time of payment of
cash or delivery of actual common shares. Future appreciation on
common shares held beyond the ordinary income recognition event
will be taxable at capital gains rates when the shares are sold.
As a general rule, we will be entitled to a tax deduction that
corresponds in time and amount to the ordinary income recognized
by the recipient, and we will not be entitled to any tax
deduction in respect of capital gain income recognized by the
recipient.
Exceptions to these general rules may arise under the following
circumstances: (1) if common shares, when delivered, are
subject to a substantial risk of forfeiture by reason of failure
to satisfy any employment, service or performance-related
condition, ordinary income taxation and our tax deduction will
be delayed until the risk of forfeiture lapses (unless the
recipient makes a special election to ignore the risk of
forfeiture); (2) if an employee is granted an option that
qualifies as an incentive stock option, no ordinary
income will be recognized, and we will not be entitled to any
tax deduction, if common shares acquired upon exercise of such
option are held more than the longer of one year from the date
of exercise and two years from the date of grant; (3) we
will not be entitled to a tax deduction for compensation
attributable to awards granted to one of our named executive
officers, if and to the extent such compensation does not
qualify as performance-based compensation under
Section 162(m) of the Internal Revenue Code, and such
compensation, along with any other non-performance-based
compensation paid in the same fiscal year, exceeds
$1 million; and (4) an award may be taxable to the
recipient at 20 percentage points above ordinary income tax
rates at the time it becomes vested, plus interest, even if that
is prior to the delivery of the cash or common shares in
settlement of the award, if the award constitutes deferred
compensation under Section 409A of the Internal
Revenue Code, and the requirements of Section 409A of the
Internal Revenue Code are not satisfied.
Section 162(m) of the Internal Revenue Code generally
disallows a publicly-held corporations tax deduction for
compensation paid to its chief executive officer or any of its
three other most highly compensated officers (other than the
chief financial officer) in excess of $1 million in any
year. Compensation that qualifies as performance-based
compensation is excluded from the $1 million
deductibility cap, and therefore remains fully deductible by the
corporation that pays it. We intend that options and
appreciation rights granted at the fair market value of the
common shares on the date of grant will qualify as
performance-based compensation. Deferred shares, share awards,
performance shares, dividend equivalents, other share awards and
dollar-denominated awards granted under the Omnibus Incentive
Plan will only qualify as performance-based
compensation when the Committee conditions such grants on
the achievement of specific performance goals in accordance with
the requirements of Section 162(m) of the Internal Revenue
Code.
The Omnibus Incentive Plan provides that we have the right to
require the recipient of any award under the Omnibus Incentive
Plan to pay to us an amount necessary for us to satisfy our
federal, state or local tax withholding obligations with respect
to such grants. We may withhold from other amounts payable to
such individual an amount necessary to satisfy these
obligations. Unless the Committee determines otherwise, a
20
participant may satisfy our withholding obligation by having
shares acquired pursuant to the grant withheld, provided that
the number of shares withheld does not exceed the
individuals minimum applicable withholding tax rate for
federal, state and local tax liabilities. The Omnibus Incentive
Plan also provides that the Committee may permit a participant
to satisfy our withholding obligation that exceeds the minimum
applicable withholding tax rate by transferring to us previously
acquired common shares.
Availability
of Omnibus Incentive Plan Document
The full text of the 2007 Omnibus Incentive Compensation Plan,
as amended by the Second Amendment to Omnibus Incentive Plan, is
included as Exhibit A to this Proxy Statement.
Board
Recommendation
The Board believes that the adoption of the Second Amendment to
the American Greetings Corporation 2007 Omnibus Incentive
Compensation Plan to increase the number of shares authorized
for issuance thereunder will enable American Greetings to
continue to provide important equity-based and other incentives
to employees, non-employee directors and consultants who are
expected to contribute materially to our future success.
Accordingly, the Board unanimously recommends approval of the
Second Amendment to the American Greetings Corporation 2007
Omnibus Incentive Compensation Plan by the shareholders.
Equity
Compensation Plan Information
The following table provides information about our common shares
that may be issued under our equity compensation plans as of
February 28, 2011.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
Number of Securities
|
|
|
|
Securities to be
|
|
|
|
|
|
Remaining Available for
|
|
|
|
Issued Upon
|
|
|
Weighted-Average
|
|
|
Future Issuance Under
|
|
|
|
Exercise of
|
|
|
Exercise Price of
|
|
|
Equity Compensation
|
|
|
|
Outstanding
|
|
|
Outstanding
|
|
|
Plans (Excluding
|
|
|
|
Options, Warrants
|
|
|
Options,
|
|
|
Securities
|
|
Plan Category
|
|
and Rights
|
|
|
Warrants and Rights
|
|
|
Reflected in Column (a))
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
Equity compensation plans approved by security
holders(1)
|
|
|
6,902,178
|
|
|
$
|
16.82
|
|
|
|
1,129,006
|
|
Equity compensation plans not approved by security holders
|
|
|
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
6,902,178
|
|
|
$
|
16.82
|
|
|
|
1,129,006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Column (a) includes 4,533,931
Class A common shares and 1,166,395 Class B common
shares that may be issued in connection with the exercise of
outstanding stock options. The amount in column (a) also
includes 749,500 Class A common shares and 141,000
Class B common shares that may be issued upon the
settlement of outstanding performance shares that have been
awarded under the Corporations equity compensation plans,
assuming the maximum performance or other criteria have been
achieved. In addition, the amount in column (a) includes
110,999 Class A common shares and 29,675 Class B
common shares related to restricted stock units that may be
issued upon the satisfaction of service-based vesting period.
The amount in column (a) also includes 30,115 Class A
common shares and 140,563 Class B common shares
representing share equivalents that have been credited to the
account of certain officers or directors who have deferred
receipt of shares earned and vested under our 1997 Equity and
Performance Incentive Plan or the Omnibus Incentive Plan or that
were to be paid in lieu of cash directors fees under the
1995 Director Stock Plan, which will be issued under these
plans upon the expiration of the deferral period.
|
Column (b) is the weighted-average exercise price of
outstanding stock options; excludes restricted stock units,
performance shares and deferred compensation share equivalents.
Column (c) includes 924,164 Class A common shares and
134,054 Class B common shares, which shares may generally
be issued under the Corporations equity compensation plans
upon the exercise of stock options or stock appreciation rights
and/or
vesting of awards of deferred shares, performance shares or
restricted stock units.
21
PROPOSAL 3
ADVISORY
VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION
(SAY-ON-PAY)
Under the Dodd-Frank Wall Street Reform and Consumer Protection
Act enacted in July 2010 (the Dodd-Frank Act), and
as required by Section 14A(a)(1) of the Securities Exchange
Act of 1934 (the Exchange Act), the Board is
providing the shareholders of American Greetings the opportunity
to vote on an advisory, non-binding basis, to approve the
compensation paid to American Greetings named executive
officers, as disclosed in this Proxy Statement.
We are asking our shareholders to indicate their support for the
compensation of our named executive officers as described in
this Proxy Statement. This vote is not intended to address any
specific item of compensation, but rather the overall
compensation of our named executive officers and the executive
compensation program and practices described in this Proxy
Statement. Accordingly, we are asking our shareholders to vote
on the following resolution:
RESOLVED, that the compensation paid to the companys
named executive officers, as disclosed pursuant to the
compensation disclosure rules of the SEC, including the
Compensation Discussion and Analysis, compensation tables and
narrative discussion in this Proxy Statement, is hereby
APPROVED.
As an advisory vote, the shareholder vote on named executive
officer compensation is not binding on the company or the Board.
Although the shareholder vote on named executive officer
compensation is not binding on the company, the Board and the
Compensation Committee will consider the outcome of the vote in
establishing our compensation philosophy and making future
compensation decisions.
As described more fully in the Compensation Discussion and
Analysis section of this Proxy Statement, there are several
components of our executive compensation program that we believe
are crucial, that will attract the talented individuals
necessary to realize success, and that we believe create value
for our shareholders. These performance-based components include
both long-term incentive plans, such as awards of restricted
stock units and performance shares that vest over time, provided
that the executive remains employed with the company, and
short-term awards, such as annual cash awards based on
performance according to the provisions of our Key Management
Annual Incentive Plan. In fiscal 2011, we continued with the
same executive compensation philosophy that we have had in place
for several years. The core of the companys executive
compensation program, and the fundamental principal of our
philosophy, continues to be to
pay-for-performance
performance of the organization and its business units, and
performance of the individual compared to financial
goals, strategic initiatives and individual goals. Using this
philosophy, we determine the compensation programs and practices
for all our executive officers, including our named executive
officers. The compensation decisions we made in fiscal 2011 were
based on this principle.
We believe that our Board and its Compensation Committee have
developed a strong compensation package that is consistent with
our company goals and strategies and aligned with the long-term
interests of our shareholders. Please take a moment to review
the Compensation Discussion and Analysis section of this Proxy
Statement for a thorough discussion of the details of the
companys executive compensation program.
Board
Recommendation
The Board unanimously recommends a vote FOR the
resolution approving the compensation of the companys
named executive officers, as disclosed in this Proxy
Statement.
22
PROPOSAL 4
ADVISORY
VOTE ON THE FREQUENCY FOR FUTURE SHAREHOLDER ADVISORY VOTES
ON NAMED
EXECUTIVE OFFICER COMPENSATION
Under the Dodd-Frank Act, and as required by
Section 14A(a)(2) of the Exchange Act, the Board is
providing the shareholders of American Greetings the opportunity
to recommend, on an advisory basis, whether the shareholder
advisory vote on named executive officer compensation, as
discussed in Proposal 3 above, should occur every year,
every two years or every three years.
As an advisory vote, your recommendation as to the frequency for
future shareholder advisory votes on named executive officer
compensation is not binding on the company or the Board. We
value shareholder opinion, however, and will consider the
outcome of the shareholder recommendation when determining the
frequency for future shareholder advisory votes on named
executive officer compensation.
The Board has determined that an advisory vote on named
executive officer compensation every three years is the optimum
approach for American Greetings for reasons including the
following:
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The three-year period will provide shareholders sufficient time
to evaluate and respond to the effectiveness of American
Greetings short- and long-term incentive programs, some of
which are based on a multi-year cycle.
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The three-year period provides the Board and the Compensation
Committee sufficient time to thoughtfully evaluate and respond
to shareholder input and effectively implement any desired
changes to the companys executive compensation program.
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From time to time, important elements of the executive
compensation plan are based on multi-year performance results.
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The effect of a compensation plan designed to span several years
might not be determinable before the completion of the plan term.
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Board
Recommendation
The Board unanimously recommends a vote for EVERY THREE
YEARS for the frequency for future shareholder advisory
votes on named executive officer compensation.
Shareholders are not voting to approve or disapprove the
Boards recommendation. Shareholders may choose among the
four choices (every year, every two years, every three years or
abstain) set forth above.
23
COMPENSATION
DISCUSSION AND ANALYSIS
Executive
Summary
During fiscal 2011, our sales and operating results continued to
be impacted by the strategic actions taken over the past couple
of years related to our strategy of product leadership and
focusing our resources on enhancing our core competencies within
greeting cards. These actions, all of which occurred prior to
2011, included the acquisition of Recycled Paper Greetings, the
acquisition of the Papyrus trademark and wholesale division of
Schurman Fine Papers, the change in our operating model in
Mexico and the party goods transaction with Amscan, Inc. In
addition, in prior periods we also divested our Retail
Operations segment, shut down our Mexican operations and closed
our party goods facility in Michigan. The integration and
shutdown activities associated with these strategic changes to
our portfolio of businesses are now substantially complete and
we are beginning to realize the associated cost savings and
synergies. With the successful integrations of Papyrus and
Recycled Paper Greetings, we have established what we believe to
be the industry-leading portfolio of products. Our financial
performance exceeded our expectations for fiscal 2011. Our
earnings increased compared to the previous year, enabled by our
refined portfolio, good expense management, and changed capital
structure. In addition, our cash flow from operating activities
minus capital expenditures exceeded our original guidance by 14%.
In fiscal 2011, we continued with the same executive
compensation philosophy that we have had in place for several
years. We use this philosophy to determine the compensation
programs and practices for all our executive officers, including
our named executive officers who are listed in the Summary
Compensation Table. The fundamental principle of this philosophy
is performance performance of the organization and
its business units, and performance of the
individual compared to financial goals, strategic
initiatives and individual goals. The compensation decisions we
made in fiscal 2011 were based on this principle.
In fiscal 2011, in addition to our financial goals, we measured
our named executive officers performance based, in part,
on their contributions to achieving our major corporate
initiatives, which were to:
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drive product leadership;
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complete the integration of the Papyrus wholesale business and
Recycled Paper Greetings;
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develop new, and grow existing, businesses;
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continue to redesign the processes and systems we use to
develop, source and deliver our products to improve efficiency
and execution;
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continue to achieve supply chain cost savings, reducing expenses
through such activities as rationalizing certain business units
and product lines; and
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continue to develop our human capital and improve the diversity
of our workforce.
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In fiscal 2011 we made few material changes to the principal
compensation programs that we had in place during fiscal 2010.
However, beginning with grants made in fiscal 2011, we revised
our equity compensation program to reduce the annual option
grant size for eligible participants, including the named
executive officers, and to start granting participants
restricted stock units, or RSUs. In addition, beginning in
fiscal 2012, we further revised our equity compensation program
to eliminate the granting of stock options so that our regular
annual equity grant program now consists of all RSUs rather than
a combination of RSUs and stock options. As described below, our
fiscal 2011 financial performance exceeded the performance share
programs maximum earnings before interest and taxes, or
EBIT, target of $150 million (or $186.6 million, as
adjusted by the factors described below under Key
Management Annual Incentive Plan General). As
a result, each of the named executive officers was credited
performance shares at 100% of the fiscal 2011 maximum number of
shares for their specific positions, although these shares
remain subject to time-based vesting requirements. The actual
number of stock options and RSUs granted to each of our named
executive officers during fiscal 2011 was at the target level or
higher, which was determined by the individuals
performance rating for fiscal 2010 and the target grant size for
their position. The number of RSUs granted in fiscal 2012 to our
named executive officers was also at the target level or higher,
which was determined by the individuals performance rating
for fiscal 2011 and the target grant size for their position.
24
We did not change the named executive officers fiscal 2011
target incentive levels under the Key Management Annual
Incentive Plan from the prior year. As described below, the
payments made to our named executive officers in April 2011 were
based on our fiscal 2011 financial performance, which exceeded
the Key Management Annual Incentive Plans earnings per
share, or EPS, target of $1.94 per share, Total Revenue target
of $1.6204 billion and Corporate EBIT target of
$160.9 million (or EPS target of $2.16 per share, Total
Revenue target of $1.6202 billion, and Corporate EBIT
target of $197.5 million, in each case as adjusted by the
factors described below under Key Management Annual
Incentive Plan General), resulting in payouts
to the named executive officers under the corporate and business
unit components of the Key Management Annual Incentive Plan at
181.2% and 194.8% of the target incentive percentages for their
specific positions, respectively. In addition, under our salary
increase program for North American salaried associates, in
fiscal 2011, each of our named executive officers received a
base salary increase, effective May 1, 2010, ranging from
3% to 12% based on his individual performance in fiscal 2010,
and in fiscal 2012 each of our named executive officers received
a base salary increase, effective May 1, 2011, ranging from
3% to 4% based on his individual performance in fiscal 2011.
General
Philosophy
We believe that our executive compensation program should enable
us to attract, reward and retain those talented executives we
need in our organization to achieve our objectives. We also
believe that our compensation program should reward our
executives for achieving their goals. We believe that these
goals should include components from corporate-wide, business
unit and individual performance initiatives and that these goals
should align the efforts and interests of the executives with
the interests of American Greetings and, most importantly, the
interests of our shareholders. Under our programs, executives
who achieve their individual performance goals and who play a
role in achieving the corporate and applicable business unit
goals may be awarded both cash and equity-based incentives.
We believe that our compensation program, in total, should be
competitive with compensation programs offered by other
employers of similar size and in similar industries. We also
believe that the compensation paid to any one individual
executive should be differentiated from that paid to our other
executives based on the executives skills and experience,
overall performance contributions, and performance compared to
specific goals and objectives.
Board
Processes
Although many compensation decisions are made in the first
quarter of the fiscal year, our compensation planning process
neither begins nor ends with any particular Compensation
Committee meeting. Compensation decisions are designed to
encourage and reward for accomplishing our fundamental business
objectives and strategic goals within the principles of our
compensation philosophy. Business planning, succession planning,
evaluation of management performance and consideration of the
business environment are year-round processes. Consequently, our
compensation process is also a year-round process.
In establishing compensation for fiscal 2011, the Compensation
Committee conducted a review of the compensation and performance
of the Chief Executive Officer, and reviewed market data on
similar positions in the marketplace to obtain a general
understanding of current compensation practices, when
establishing the Chief Executive Officers compensation
level. The Chief Executive Officer
and/or the
President and Chief Operating Officer reviewed the performance
of the remaining executive officers. They made initial
determinations of each executive officers individual
performance and changes to base salary, subject to the review
and approval of the Compensation Committee (which consulted from
time to time with the Senior Vice President of Human Resources).
Although management makes recommendations about designs for and,
if warranted, changes to our compensation programs, in
establishing the compensation for fiscal 2011, the Compensation
Committee approved all incentive and equity programs in which
executive officers or directors participated, as well as all
equity grants and cash payments made to any executive officer or
director made under any of these programs. Management
recommended for approval of the Compensation Committee the
fiscal 2011 business performance targets upon which payments to
executive officers were based. As it relates to compensation for
fiscal 2011, the Chief Executive Officer, Senior Vice President
and General Counsel, and the Senior Vice President of Human
25
Resources worked with the Compensation Committee chair in
establishing the agenda for Compensation Committee meetings and
typically attended committee meetings (but were not present
during executive sessions unless requested by the Committee).
Management also prepared meeting information and supporting
materials for each Compensation Committee meeting. Executive
officers, including the Chief Executive Officer, the President
and Chief Operating Officer, the Chairman, and the Senior Vice
President of Human Resources, regularly participated in
Compensation Committee meetings to provide:
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background information regarding the compensation of our
employees;
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evaluations of the performance of executive officers;
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recommendations on compensation plans and programs, and the
actual compensation of executive officers; and
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other information as may be requested by the Compensation
Committee.
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Setting
Compensation
In connection with setting the actual compensation levels for
our executive officers, from time to time we collect information
from the marketplace on how other employers compensate people in
similar positions, using industry data, consumer products
industry data and, depending on the position, data from industry
segments or specific companies, specifically to obtain a general
understanding of current compensation practices. We usually
focus more heavily on data from consumer products companies
because: (1) our core business is consumer products
focused we create, manufacture, market and
distribute social expression products sold to consumers; and
(2) we often recruit employees from consumer product
companies, or from companies that support or otherwise service
the consumer products industry. Generally, for both the overall
industry and consumer products market data, we look at companies
with revenue that approximates our revenue. We typically obtain
this data from compensation surveys that are published by
nationally recognized consulting firms. Alternatively, as
described below, we may commission a custom study by one of
these consulting firms, using data held in their databases or
information included in the proxy statements and other public
filings of companies similar to us. While information developed
solely from public filings covers only those individuals for
whom compensation information is disclosed publicly, generally
these positions correlate to our Chief Executive Officer,
President and Chief Operating Officer and certain of our Senior
Vice Presidents. In general, compensation realized by executives
from prior awards or grants made by us, such as gains from
previously awarded stock options or equity awards, is not taken
into account in setting current compensation levels. We believe
that our executive officers should be fairly compensated each
year compared to market pay levels, internal equity among other
executive officers, and their own individual performance
contributions.
With respect to compensation paid in fiscal 2011, we engaged
Mercer to conduct a competitive market compensation analysis for
certain of our executive officers, including the named executive
officers. With respect to compensation to be paid in fiscal
2012, we considered the analysis conducted by Mercer with
respect to fiscal 2011 compensation, updated to account for the
effect of inflation, for each of the named executive officers
except the Chief Executive Officer, for whom a new compensation
study was conducted by Mercer in which we looked at the
compensation paid to the chief executive officers at each of our
peer group companies described below. We do not specifically
benchmark elements of compensation against market compensation
analyses or our peer group companies. Instead, we use
compensation studies and have established a peer group to help
us compare the compensation we pay with those of other,
similarly situated employers to gain context for current
compensation practices and ensure that our practices, considered
collectively, are market and cost competitive, while creating
the appropriate incentives to encourage the achievement of our
business objectives. In the studies, Mercer compared the
compensation that we pay our named executive officers to that
paid to executives with comparable positions at the nineteen
peer group companies listed below. These nineteen peer group
companies are the same companies used in the last study
conducted for us by Mercer in fiscal 2009, excluding Spectrum
Brands, which was removed from the peer group due to its
bankruptcy filing. Because there are few comparable greeting
card companies with publicly available information, we selected
these companies in consultation with Mercer because the nature
of their businesses is similar to ours, in this case primarily
in the housewares and specialties categories or otherwise with
similar product lines, and they are considered representative of
the companies with which we compete for
26
executive talent. These peer group companies also collectively
had median revenues that are similar to American Greetings
revenues, and are among companies with which we compare
ourselves for other compensation purposes. Based on the most
recent public reports available at the time we set fiscal 2011
and fiscal 2012 compensation (in April 2010 and April 2011,
respectively), the median peer group revenues were
$1,636 million and $1,755 million, respectively,
compared to our fiscal 2010 and fiscal 2011 revenues of
$1,636 million and $1,593 million, respectively.
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Revenue(1)
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Revenue(2)
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Company
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($ in millions)
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($ in millions)
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Jarden Corporation
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$
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6,022.7
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$
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5,152.6
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Energizer Holdings, Inc.
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$
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4,248.3
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$
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3,999.8
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Hasbro, Inc.
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$
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4,002.2
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$
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4,067.9
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McCormick & Co.
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$
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3,336.8
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$
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3,192.1
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The Scotts Miracle-Gro Company
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$
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3,139.9
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$
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2,980.7
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Herbalife Ltd.
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$
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2,734.2
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$
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2,324.6
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Church & Dwight, Inc.
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$
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2,589.2
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$
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2,520.9
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Tupperware Brands Corp.
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$
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2,300.4
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$
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2,127.5
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Scholastic Corporation
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$
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1,912.9
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$
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1,849.3
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Alberto-Culver Company
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$
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1,597.2
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$
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1,434.0
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American Greetings Corporation
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$
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1,592.6
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$
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1,635.9
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Central Garden & Pet Company
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$
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1,523.6
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$
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1,614.3
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Revlon, Inc.
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$
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1,321.4
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$
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1,295.9
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Elizabeth Arden, Inc.
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$
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1,103.8
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$
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1,070.2
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Callaway Golf Company
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$
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967.7
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$
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950.8
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Blyth, Inc.
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$
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958.1
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$
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1,050.8
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Libbey Inc.
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$
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799.8
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$
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748.6
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JAKKS Pacific, Inc.
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$
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747.3
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$
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803.7
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CSS Industries, Inc.
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$
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448.5
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$
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482.4
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Lifetime Brands, Inc.
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$
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443.2
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$
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415.0
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(1)
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Based on the most recent public
reports available at the time we set fiscal 2012 compensation
(in April 2011).
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(2)
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Based on the most recent public
reports available at the time we set fiscal 2011 compensation
(in April 2010).
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Elements
of Executive Compensation
The compensation program for our named executive officers
generally consists of the following elements:
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Base salaries;
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Annual cash incentive awards;
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Long-term equity compensation;
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Benefits;
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Perquisites; and
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Termination
and/or
change in control protection.
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We selected these compensation elements to create a flexible
package that bases much of its payout on the performance of the
individual executive, the business unit to which that executive
is assigned, and the total corporation.
27
Allocation
Among Elements
Under our compensation structure, the mix of base salary, annual
cash incentive and equity compensation as a percentage of total
direct compensation varies depending upon the positions
level in management. While we generally expect our compensation
components and total compensation to approximate the market
median, we do not specifically benchmark the compensation paid
to our executive officers, but instead evaluate the total
compensation paid to our named executive officers considering a
number of factors in addition to market pay levels. For example,
in considering total compensation, as well as the allocation
among the elements of compensation, we consider such factors as
company performance, internal equity among other executive
officers, retention and each executives individual
performance contributions. Each of these factors is assessed
qualitatively and there are no specific weightings given to any
criteria. Based on the study conducted by Mercer with respect to
fiscal 2011 compensation and described above in Setting
Compensation, we found that the target total cash
compensation (generally base salary plus the target cash bonus
under our Key Management Annual Incentive Plan) paid to our
named executive officers was above the market median, while
long-term equity compensation paid to our named executive
officers as a group was generally below the market median,
resulting in total direct compensation paid to our named
executive officers as a group being below the market median.
There is no pre-established policy or target for allocating
between either cash and non-cash or short-term and long-term
incentive compensation. In allocating compensation among these
elements, we believe that the compensation of our senior most
levels of management the levels of management having
the greatest ability to influence American Greetings
performance should have a significant portion of
their compensation at risk, and should be paid only on the
accomplishment of pre-established goals and objectives. We
believe that lower levels of management should receive a greater
portion of their compensation in base salary with
less variability because they have less of an
ability to significantly affect the financial performance of the
business.
Analysis
of Compensation Elements Paid to Named Executive
Officers
Base
Salaries
General. Base salaries are provided to
compensate the executive for performing the essential
responsibilities of his or her job, as well as to provide
market-competitive compensation to attract, retain and motivate
exceptional executive talent. We evaluate each named executive
officers base salary annually, and when making changes we
consider:
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the executive officers contributions to the organization,
including accomplishment of individual goals and objectives;
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any changes in responsibilities and roles;
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any significant differences between the executive officers
base salary and the base salaries of comparable executives in
the market, specifically among our peer group; and
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internal pay equity.
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Salary adjustments, if any, normally take effect on
May 1st, based on performance in the immediately preceding
fiscal year.
Named Executive Officers. To determine
the base salary to be paid to the Chief Executive Officer in
fiscal 2012, as well as to determine his compensation under the
individual performance component of the Key Management Annual
Incentive Plan, and his equity grant level, the Compensation
Committee assessed the Chief Executive Officers
performance during, and his contribution to our results in,
fiscal 2011. The Compensation Committee primarily considered our
financial performance, including objectives based on achieving
the Total Revenue, Corporate EPS and the Corporate EBIT goals
described below under the heading Key Management Annual
Incentive Plan. The Compensation Committee also considered
the Chief Executive
28
Officers other individual performance goals, which were
based on his contributions to the achievement of our major
corporate initiatives as described above, including:
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driving product leadership;
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completing the integration of the Papyrus wholesale business and
Recycled Paper Greetings into the existing businesses;
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developing new, and growing existing, businesses;
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continuing to redesign the processes and systems we use to
develop, source and deliver our products to improve efficiency
and execution;
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continuing to achieve supply chain cost savings, reducing
expenses through such activities as rationalizing certain
business units and product lines; and
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developing our human capital and improve the diversity of our
workforce.
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Each of these goals is primarily assessed qualitatively and
there are no specific weightings given to any criteria. The
Compensation Committee determined that for fiscal 2011,
Mr. Zev Weiss exceeded these objectives. Also, in assessing
the base salary to be paid to the Chief Executive Officer in
fiscal 2012, the Compensation Committee considered the study
conducted by Mercer in March 2011, as described above under
Setting Compensation, where it found that target
total cash compensation paid to the Chief Executive Officer was
above the market median, while long-term equity compensation
continued to be below the market median, resulting in total
direct compensation paid to our Chief Executive Officer being
below the market median. Based on Mr. Zev Weisss
performance, and in consideration for the competitiveness of his
current total cash compensation, effective May 1, 2011, the
Compensation Committee increased Mr. Zev Weisss
salary by 4%, from $949,103 to $987,067.
In assessing the base salaries to be paid to each named
executive officer other than the Chief Executive Officer in
fiscal 2012, the Compensation Committee considered the study
conducted by Mercer with respect to fiscal 2011 compensation and
described above under Setting Compensation, as
updated to account for the effect of inflation. Also in
assessing the base salaries to be paid in fiscal 2012 to each
named executive officer other than the Chief Executive Officer,
as well as in determining such officers compensation under
the individual performance component of the Key Management
Annual Incentive Plan and their equity grant level, the
Compensation Committee considered the Chief Executive
Officers proposed change to each named executives
base salary, together with his assessment of each other named
executive officers performance during fiscal 2011 relative
to the officers individual performance objectives. Our
named executive officers individual performance goals are
developed to ensure that the officers and the business units for
which they are responsible are driving those actions and
initiatives that will ensure that the business units and the
company achieve their short-term financial objectives and their
long-term strategic goals. These goals are designed to be
internally consistent across business units, and to collectively
drive the achievement of our short- and long-term goals and
strategies. These goals are generally assessed qualitatively,
with no specific weightings given to any criteria.
The fiscal 2011 goals for Mr. Jeffrey Weiss included
objectives based on achieving the Total Revenue, Corporate EPS
and the Corporate EBIT goals described below under the heading
Key Management Annual Incentive Plan, as well as
reducing costs and improving efficiency through process
improvement, beginning implementation of an enterprise resource
planning system, beginning a globalization initiative, and
improving product yield. Mr. Jeffrey Weisss goals
also included:
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the integration of Recycled Paper Greetings and the Papyrus
wholesale business;
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introducing initiatives to support the companys product
leadership efforts;
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expanding retail distribution channels; and
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developing new and existing character properties.
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Based on his exceeding most of his individual performance goals,
and considering compensation paid for comparable positions at
the companies in the peer group used in the fiscal 2011
compensation study conducted by Mercer, effective May 1,
2011 the Compensation Committee determined to increase
Mr. Jeffrey Weisss base salary by 4%, from $742,906
to $772,622.
29
The fiscal 2011 goals for Mr. Smith included:
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objectives based on achieving the Total Revenue and the
Corporate EBIT goals described below under the heading Key
Management Annual Incentive Plan;
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integrating Recycled Paper Greetings finance functions;
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implementing audit governance best practices, procedures and
control mechanisms;
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strengthening the annual financial planning and performance
processes;
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implementing new payroll and other shared services
administrative practices;
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executing capital structure changes;
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overseeing significant tax benefits related to strategic
changes; and
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developing our human capital and improving workforce diversity.
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The fiscal 2011 goals for Mr. Beeder included:
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objectives based on achieving the Total Revenue, Corporate EPS
and the Corporate EBIT goals described below under the heading
Key Management Annual Incentive Plan, as well as
achieving revenue growth in core accounts and business segments;
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improving yield, business processes, and merchandising and
planning functions;
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strengthening business development through renewing, revising,
and executing customer agreements and improved customer planning
and management activities;
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growing, harvesting
and/or
exiting specialty businesses;
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improving retail productivity at core accounts;
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implementing marketing activities to strengthen the corporate
brand;
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leveraging the companys inbound licensing activities;
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improving sales and marketing analytics; and
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developing our human capital and improving workforce diversity.
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The fiscal 2011 and fiscal 2010 goals for Mr. Goulder
included:
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effectively executing cost reduction in the supply chain as well
as identifying future cost savings initiatives;
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improving productivity while decreasing costs;
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partnering with commercial teams to improve yield, manage costs
and grow sales and profitability;
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improving service levels, including by manufacturing on time and
by improving the retail point of sale fulfillment while
minimizing inventory costs;
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driving continuous improvement in the field sales organization;
managing a cost efficient internal consulting group that
supports cost-out programs, growth efforts and the
identification and development of corporate strategic
goals; and
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supporting key human resources, sustainability and corporate
initiatives.
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Based on Mr. Smith meeting most of his individual
performance goals, effective May 1, 2011 the Compensation
Committee determined to increase Mr. Smiths salary by
approximately 3%, from $424,711 to $437,453. Based on
Mr. Beeder significantly exceeding most of his individual
performance goals, effective May 1, 2011 the Compensation
Committee determined to increase Mr. Beeders salary
by approximately 4% from $492,000 to $511,680. Based on
Mr. Goulder meeting most of his individual performance
goals, effective May 1, 2011 the Compensation Committee
determined to increase Mr. Goulders salary by
approximately 3% from $492,067 to $508,829.
For purposes of determining the base salary paid to each of the
named executive officers during fiscal 2011, each of the named
executive officers received a base salary increase effective
May 1, 2010, based on overall individual performance,
achievement of individual performance goals for fiscal 2010,
and/or
competitive pay
30
practices as described in our definitive proxy statement filed
in May 2010. Mr. Goulder, who was not a named executive
officer last year, also received a base salary increase
effective May 1, 2010 of approximately 3% from $477,735 to
$492,067 based on his overall individual performance and meeting
most of his individual performance goals for fiscal 2010
described above.
Key
Management Annual Incentive Plan
General. Consistent with our emphasis
on
pay-for-performance,
we have established the American Greetings Corporation Key
Management Annual Incentive Plan, under which our executive
officers, including our named executive officers, are eligible
to receive awards based on performance against annually
established performance goals. These goals include company-wide
and individual business unit financial measures as well as
individual performance objectives. This plan is an important
component of our compensation package because it is designed to
focus our executive officers efforts on, and reward
executive officers for, annual operating results that help
create value for our shareholders. At its target level, in
fiscal 2011 the Key Management Annual Incentive Plan award
represented between 41% and 50% of a named executive
officers total cash compensation, and between 31% and 33%
of a named executive officers total direct compensation,
depending on the executives position.
The corporate performance goals for the Key Management Annual
Incentive Plan are determined through our annual planning
process, which generally begins in the December that precedes
the beginning of the fiscal year. During this process,
management develops an annual operating plan that is consistent
with our strategic plan, and that contains specific,
quantifiable annual financial goals. These goals are established
for each business unit and for American Greetings as a whole.
Around the beginning of each fiscal year, the full Board of
Directors meets with senior management and discusses and
approves the operating plan for the subsequent fiscal year. The
operating plan goals form the basis for the annual incentive
performance measures and goals. In this manner, the Board of
Directors approved the annual operating plan, and its financial
goals and objectives, for fiscal 2011. Similarly, for fiscal
2011, the Compensation Committee approved these operating plan
goals, as adjusted by the factors described below, as the
incentive plans financial objectives for both the
corporate and business unit components for executive officers.
Any awards granted under the Key Management Annual Incentive
Plan are determined at year-end based on actual performance
against the pre-established specific corporate, business unit,
and individual goals. The Chief Executive Officer reviews each
named executive officers individual performance and
recommends to the Compensation Committee for its approval the
level of compensation the officer should receive based on his
individual performance. The Committee itself evaluates the
performance of the Chief Executive Officer. The incentive plan
award payments to any named executive officer must be reviewed
and approved by the Compensation Committee prior to payment. The
Compensation Committee may modify the recommendation provided by
the Chief Executive Officer with respect to any named executive
officer, which in turn affects payment under the Key Management
Annual Incentive Plan. The Compensation Committee must approve
any adjustments to the financial goals applicable to executive
officers for purposes of determining if a business unit or the
company has achieved its goals. Except as otherwise determined
by the Compensation Committee, permitted adjustments are
determined at the same time that the financial goals are
initially established at the beginning of each year. These
adjustments are described in a manner that can be objectively
determined and are intended to account for items, events or
changes in the business or its plans that, if included, would
either (1) not be a meaningful measure of performance; or
(2) not appropriately incentivize management. When made,
these adjustments apply to all managers, including the named
executive officers, who are assigned to the business unit for
which the adjustment is being granted or, in the case of an
adjustment to a corporate goal, these adjustments apply to all
managers, including the named executive officers. With respect
to the corporate and business unit goals established under the
Key Management Incentive Plan for fiscal 2011, these goals are
calculated in accordance with U.S. generally accepted
accounting principles, or GAAP. However, at the beginning of
fiscal 2011, when the goals were established, the Committee
determined that the following items or events, if they occur,
should be excluded, and the Corporate EPS, Total Revenue and
Corporate EBIT
31
goals and results, as applicable, against such goals should be
adjusted accordingly, if they were not otherwise previously
factored into the financial goals:
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Charges related to management bonus plans;
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|
Gains, losses or expenses for the fiscal year determined to be
extraordinary or unusual in nature or infrequent in occurrence;
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|
Gains, losses or expenses for the fiscal year related to the
acquisition or disposal of a segment or business all as
determined in accordance with GAAP;
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|
Gains, losses or expenses for the fiscal year related to a
change in accounting principle, as consistently applied;
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|
Charges related to head count and other reductions in force,
including severance;
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|
Gains, losses or expenses for the fiscal year related to
restructuring charges, discontinued operations and fixed asset
sales;
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|
Translational gains or losses arising from changes in foreign
exchange rates;
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Non-cash long-lived asset impairment charges;
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Gains, losses or expenses associated with plant closings;
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|
Inventory buy-back expenses incurred in connection with the
conversion of a customer to a scan-based trading relationship;
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The effect of acquisitions and dispositions;
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The amount by which upfront payments, investments or other
expenditures incurred in connection with new or amended retail
contracts are in excess of revenue that are generated from such
contracts during the fiscal year;
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|
The impact of repurchases of our debt or capital stock in the
open market or otherwise; and
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|
The effect of capital restructuring initiatives, including
refinancing of indebtedness.
|
Performance Measures. Under the fiscal
2011 Key Management Annual Incentive Plan, incentives are
awarded to our named executive officers based on three
components: (1) corporate performance (weighted at 30%),
(2) business unit performance (weighted at 50%), and
(3) individual performance (weighted at 20%).
For the named executive officers:
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the corporate component is based on performance compared
to an earnings per share (Corporate EPS) goal and a total
revenue (Total Revenue) goal;
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|
the business unit component is based on performance
compared to a consolidated corporate earnings before interest
and taxes (Corporate EBIT) goal, after adjustments for
variations in net capital employed compared to the financial
plan, with a charge/credit at the weighted average cost of
capital; and
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|
the individual component is generally based on the
officers individual performance compared to performance
goals and objectives that are designed to ensure the achievement
of the business unit and corporate goals, as well as any
longer-term strategic initiatives, but will also include
performance against financial targets, evaluated qualitatively.
|
The primary measure for performance under the corporate
component of our Key Management Annual Incentive Plan is
earnings per share, or Corporate EPS, weighted at 90% of the 30%
target award for the corporate component. Because of its direct
correlation to the interests of our shareholders, we believe an
EPS goal is a good measure of overall management performance. To
provide an incentive for the profitable growth of corporate
revenue, the Corporate EPS performance measure is complemented
by a total revenue performance measure, weighted at 10% of the
30% target award for the corporate component. We measure
Corporate EPS and Total Revenue at the end of the fiscal year.
Corporate EPS is calculated as the annual consolidated net
income divided by the planned total number of shares outstanding
as calculated on a fully diluted basis, adjusted by the factors
described above in this section under
General. Total Revenue is calculated as
consolidated net sales and other revenues, including but not
limited to royalties, advertising, subscriptions and other
revenue streams directly related to the conduct of our principal
business, adjusted by
32
the factors described above in this section under
General. For fiscal 2011, the Corporate
EPS goal was $1.94 per share (or $2.16 per share, as adjusted by
the factors described above in this section under
General) and the Total Revenue goal was
$1.6204 billion (or $1.6202 billion, as adjusted by
the factors described above in this section under
General).
The performance measure under the business unit component of the
Key Management Annual Incentive Plan for our named executive
officers is Corporate EBIT, which is consolidated earnings
before interest and taxes, as adjusted by the factors described
above in this section under General. We
believe Corporate EBIT is a good way to measure the operating
performance of our business as a whole, and is a measure that
also is in the direct interest of our shareholders. In
determining performance against the Corporate EBIT goal, in
addition to the factors described above in this section under
General, we adjust the performance to
reflect any variance from the planned net capital employed. We
believe it is important to include such an adjustment for net
capital employed because it ensures an appropriate emphasis on
balance sheet management. In addition, the Corporate EBIT goal
is measured on a pre-tax basis because (1) we believe a
pre-tax measure more accurately reflects actual operating
performance; (2) despite planning efforts, tax payments and
refunds can be somewhat unpredictable; as a result, including
tax as an operating metric can lead to wide swings in
performance relative to goal; and (3) only a few of our
executives are in a position to control variables that impact
operating profit on an after-tax basis. The Corporate EBIT goal
for fiscal 2011 was $160.9 million (or $197.5 million,
as adjusted by the factors described above in this section under
General).
The Compensation Committee set the Corporate EPS and Corporate
EBIT goals at levels that were 45% and 39%, respectively, higher
than the levels established for the prior year. Although the
goals for fiscal 2011 did not represent an increase over the
actual, adjusted results achieved in fiscal 2010 under the Key
Management Incentive Plan, the company had extraordinary results
in 2010 that the Compensation Committee believed represented a
significant stretch to achieve and were unlikely to be
duplicated in fiscal 2011. As a result, the fiscal 2011 goals
were set at levels that the Committee believed, notwithstanding
the results in fiscal 2010, reflected a stretch for management
given the continuing uncertainty in the business environment at
that time, while representing goals that still provided an
attainable incentive.
For our named executive officers, other than the Chief Executive
Officer and the President and Chief Operating Officer, the
individual performance component is based on both the
executives accomplishment of specific goals and
objectives, and a comparison of the executives performance
with that of other executive officers, as well as that
executives contribution to the achievement of our
corporate and business unit goals. The performance of the Chief
Executive Officer and President and Chief Operating Officer is
evaluated based on the achievement of our corporate and business
unit goals, and their achievement of their individual goals and
objectives. The fiscal 2011 individual goals and objectives for
the named executive officers are described above under the
heading Base Salaries.
Target Incentive and Calculation of
Awards. The Key Management Annual Incentive
Plan target award levels, as a percentage of base salary, for
the named executive officers of American Greetings are listed
below. We generally expect our annual cash incentive awards will
approximate the market median, but we do not specifically
benchmark annual cash incentives, as described above in
Setting Compensation.
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Target Incentive
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Zev Weiss
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100
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%
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Jeffrey Weiss
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|
|
90
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%
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John W. Beeder
|
|
|
80
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%
|
Michael L. Goulder
|
|
|
80
|
%
|
Stephen J. Smith
|
|
|
70
|
%
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Under the Key Management Annual Incentive Plan, an incentive
equal to a multiple of the executive officers target
incentive percentage will be paid depending on the level of
performance achieved compared to the performance measures
described above. The maximum bonus opportunity is 200% of the
target incentive award. To earn this maximum, both the entire
corporation and the business unit must achieve at least 125% of
their financial goals, and the executive officer must
significantly exceed his individual goals. If any of these
33
levels is not met, the incentive payable will vary depending on
the performance under each performance component. Under the
Corporate EPS and Corporate EBIT component, for every 1%
increase or decrease in the percentage of the goal achieved,
compared to the goal itself, the target award for that component
will be adjusted up or down by 4% to determine the actual award.
Under the Total Revenue component, if revenue performance
exceeds 103%, or is less than 97% of, the targeted amount, the
target award for the revenue performance measure will be
increased or decreased, as applicable, by 5% for each percentage
by which we exceed 103%, or fall below 97%, as applicable, of
the total revenue goal. While both the EPS and revenue
performance measures are evaluated, and incentive awards
determined, independently of one another, in no event may the
combined award exceed the maximum permitted for the corporate
component of 200% of target. In the event at least 90% of the
Corporate EPS or Corporate EBIT goal is not achieved, there will
be no payout under that particular component. Similarly, if at
least 95% of the Total Revenue goal is not achieved, there will
be no payout for the revenue performance measure. In addition,
if at least 90% of the Corporate EPS goal is not achieved, no
incentive is earned for the individual performance component
unless the executive officer is determined to have exceeded his
individual performance goals. To retain and reward top
performers, the plan provides that if the executive officer
exceeds his individual performance goals, then notwithstanding
the failure to meet the Corporate EPS performance goal, the
individual performance component of the incentive will be
earned. If an executive officer does not meet his individual
performance goals and receives the lowest individual performance
rating, he will not receive any portion of the individual
performance component of the incentive and will only receive 50%
of the incentive otherwise earned. Incentive compensation earned
by executive officers under the Key Management Annual Incentive
Plan is paid entirely in cash.
Awards to Named Executive Officers. In
April 2011, the Compensation Committee reviewed actual results
for fiscal 2011 with respect to achievement of the Corporate
EPS, Total Revenue and Corporate EBIT performance goals. As to
the Corporate EPS goal, target EPS was $1.94 per share (or $2.16
per share, as adjusted by the factors described above in this
section under General), with a target
Total Revenue of $1.6204 billion (or $1.6202 billion,
as adjusted by the factors described above in this section under
General). Actual EPS and actual revenue
results, in each case as adjusted by the factors described above
in this section under General, were
$2.60 per share, and $1.5835 billion, respectively, or
approximately, 120.3% and 97.7% of target, respectively,
resulting in a payout as a percentage of the target incentive of
181.2% for the combined Corporate EPS and Total Revenue target
incentive measures. As to the Corporate EBIT goal, target EBIT
was $160.9 million (or $197.5 million, as adjusted by
the factors described above in this section under
General) and actual EBIT results, as
adjusted by the factors described above in this section under
General, was $244.4 million, or
approximately 123.7% of target, resulting in a payout as a
percentage of the target incentive of 194.8% for the Corporate
EBIT target incentive.
The Compensation Committee then reviewed the Chief Executive
Officers assessment of each of Jeffrey Weiss, Stephen
Smith, Michael Goulder and John Beeder and his contributions to
our results in fiscal 2011. With respect to the Chief Executive
Officer, Zev Weiss, the Compensation Committee also considered
its own assessment of his performance during fiscal 2011 based
on his individual goals described above as well as his
contribution to our financial results in fiscal 2011. As
described above under the heading Base Salaries and
in this section under General, each of
Messrs. Goulder and Smith were determined to have met his
individual performance objectives, each of Zev and Jeffrey Weiss
was determined to have exceeded most of his individual
performance goals, and Mr. Beeder was determined to have
significantly exceeded most of his individual performance goals.
As a result of these considerations, the Compensation Committee
approved the following payout amounts for the named executive
officers under the Key Management Annual Incentive Plan.
34
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Target Payout
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Actual Payout
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as a % of
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Target
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Maximum
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Actual
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|
as a % of
|
Name
|
|
Base
Salary(1)
|
|
Award
($)(1)
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|
Award
($)(1)
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|
Award
($)(1)
|
|
Base
Salary(1)
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|
Zev Weiss
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|
|
100
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|
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$
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944,495
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|
$
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1,888,991
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$
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1,716,715
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182
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%
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Stephen Smith
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70
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$
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292,793
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$
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585,587
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|
|
$
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502,902
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|
|
|
120
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%
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Jeffrey Weiss
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|
|
90
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|
|
$
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665,370
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|
|
$
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1,330,739
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|
|
$
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1,209,376
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|
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|
164
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%
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John Beeder
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|
|
80
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$
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386,667
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|
|
$
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773,334
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$
|
741,473
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|
153
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%
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Michael Goulder
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|
|
80
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|
|
$
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391,743
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|
$
|
783,485
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|
|
$
|
672,857
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|
|
|
137
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%
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|
|
|
(1)
|
|
Amounts calculated based on base
salaries actually paid or earned by the named executive officers
during fiscal 2011.
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Awards made to named executive officers under the Key Management
Annual Incentive Plan for performance in fiscal 2011 are
reflected in the Fiscal 2011 Summary Compensation Table below.
Long-Term
Incentive Compensation
Our long-term incentive compensation program has historically
consisted primarily of stock options. However, in April 2009 the
Compensation Committee adopted a performance share program under
which certain management level employees of the company,
including the named executive officers, were granted performance
shares targeting key corporate performance objectives over
fiscal 2010, fiscal 2011 and potentially fiscal 2012. In
addition, beginning in April 2010, the Compensation Committee
determined to reduce the annual option grant size for its
eligible employees, including the named executive officers, and
instead granted employees RSUs. Although stock options represent
a useful form of incentive compensation, when granting stock
options, the company incurs an expense even if the option
ultimately has no value to the recipient because the exercise
price remains higher than the market price of our stock.
Accordingly, to ensure that the costs to the company of equity
awards are aligned with the objective of providing an incentive
to its officers, yet maintaining an alignment of interests
between the shareholders and management (including the named
executive officers), beginning in May 2011, rather than
including both stock options and RSUs in the annual equity
grant, the Compensation Committee determined to grant only RSUs.
The number of performance shares and RSUs granted is based on
the participants position in the company and, with respect
to RSUs, his or her individual performance in the prior fiscal
year.
Equity awards are consistent with our
pay-for-performance
principles because they:
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align the interests of executives with those of the shareholders;
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foster employee stock ownership;
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reflect the markets assessment of our level of goal
achievement; and
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focus the management team on increasing value for the
shareholders.
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We have historically used stock options, and continue to use
performance shares and RSUs, as our long-term incentive vehicle
because we believe that the use of multiple forms of
compensation helps to provide a balance between long-term and
short-term awards in our total compensation package. The Key
Management Annual Incentive Plan focuses on the achievement of
annual performance targets, while the multi-year vesting for our
equity awards creates incentives to increase shareholder value
over a longer term and encourages ongoing executive retention.
RSUs and
Stock Options
Grant Terms. Stock option awards
provide our executive officers with the right to purchase our
common shares at a fixed exercise price for a period of up to
ten years. RSUs and stock options are earned on the basis of
continued service to us. To align their interests with those of
our shareholders, grants to our named executive officers other
than the Chief Executive Officer and the President and Chief
Operating Officer vest in approximately equal increments over
two years following the date of grant and grants to our Chief
Executive
35
Officer and President and Chief Operating Officer vest in
approximately equal increments over three years following the
date of grant.
Grant Timing. Our named executive
officers are eligible to receive annual RSU and option awards as
well as awards in connection with promotions to higher level
positions. The exercise price of stock options is based on the
fair market value of our common shares on the grant date. The
Compensation Committee has a stock option grant policy designed
to ensure that stock options are granted at such times after we
have publicly released our quarterly or annual financial
information. Under the policy, the date of grant for annual
stock option awards is the second trading day (a day that the
New York Stock Exchange is open for trading) following the
filing of our Annual Report on
Form 10-K.
The date of grant for an individual newly hired or promoted into
an eligible position is based on the month of hire or promotion,
and is either granted with the annual stock option grant or on
the second trading day following a quarterly earnings release.
Generally, we do not consider an executive officers stock
holdings or previous equity grants in determining the number of
equity awards to grant. We believe that our executive officers
should be fairly compensated each year relative to market pay
levels of our peer group and relative to our other executive
officers. Moreover, we believe that our long-term incentive
compensation program furthers our significant emphasis on
pay-for-performance
compensation. We do not have any requirement that executive
officers hold a specific amount of our common shares or stock
options.
Grants to the Named Executive
Officers. Like our other pay components,
long-term equity incentive award grants are generally expected
to approximate the market median, but we do not specifically
benchmark against competitive market levels. Instead, the size
of the equity awards depends upon the level of the position and
level of individual performance achieved by the executive, based
on the executives achievement of individual goals and
objectives in the prior fiscal year. The annual target grant
sizes are as follows:
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Fiscal 2011
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|
Fiscal 2012
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Target
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|
Actual
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|
Target
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|
Actual
|
|
|
Annual Grant
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|
Annual Grant
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|
Annual Grant
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|
Annual Grant
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Name
|
|
RSUs
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|
Options
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|
RSUs
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|
Options
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|
RSUs
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|
RSUs
|
|
Zev
Weiss(1)
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|
|
12,500
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|
|
|
50,000
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|
|
|
15,625
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|
|
|
62,500
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|
|
|
25,000
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|
|
|
28,750
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|
Jeffrey
Weiss(1)
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|
|
9,400
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|
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37,500
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|
|
|
11,750
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|
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46,875
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|
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|
18,800
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|
|
|
21,620
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|
Stephen J.
Smith(2)
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|
|
2,800
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|
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|
11,000
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|
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|
3,220
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|
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12,650
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|
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|
5,500
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|
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|
5,500
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|
John
Beeder(2)
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|
|
4,400
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|
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17,500
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|
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5,500
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|
21,875
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|
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8,800
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|
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|
11,000
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|
Michael
Goulder(2)
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|
|
4,400
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|
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|
17,500
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|
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|
4,400
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|
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|
17,500
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|
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|
8,800
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|
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|
8,800
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|
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(1)
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Equity grants in the form of
Class B common shares.
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(2)
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|
Equity grants in the form of
Class A common shares.
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In prior years, when our long-term incentive program consisted
solely of stock options, the Compensation Committee set the
target grant size for its Senior Vice Presidents (which includes
Mr. Smith) at options to purchase 22,000 Class A
common shares. With the assistance of Mercer, the Compensation
Committee determined that this grant size was appropriate based
on the median value of options granted to comparable positions
in the marketplace, consistent with our general expectation of
approximating the market median. For the Senior Vice President,
Executive Supply Chain Officer and the Senior Vice President,
Executive Sales and Marketing Officer, which are positions
currently held by Messrs. Goulder and Beeder, respectively,
the target annual option grant sizes were set at 35,000
Class A common shares to recognize their contributions as a
significant advisor to the Chief Executive Officer and the
President and Chief Operating Officer, as well as their
significant responsibilities and resulting ability to impact the
long-term strategic direction and success of our business. With
respect to the options granted to our Chief Executive Officer
and our President and Chief Operating Officer, the annual target
grant size was set in connection with their appointments to
their current positions in 2003. In connection with its decision
to replace a portion of the annual stock option award with RSUs,
beginning in fiscal 2011, the Compensation Committee determined
to decrease the target stock option award levels for all of the
named executive officers to the target levels described in the
table above, and for fiscal 2012, to replace the annual stock
option awards entirely with RSUs. The size of the target grant
sizes in
36
each case was set at a level intended to maintain the aggregate
accounting cost for the equity awards incurred by the company at
approximately the same level as incurred when our long-term
incentive program consisted solely of stock options.
The target grant sizes reflected in the table above may be
increased or decreased based on individual performance in the
prior fiscal year. A named executive officer who has not
achieved his or her individual performance goals is eligible for
an equity grant ranging from 0% to 100% of the target grant size
for his or her position for that fiscal year. A named executive
officer who is determined to have exceeded his or her individual
performance goals is eligible for an equity grant of either 115%
or 125% of the target grant size for his or her position.
The RSUs and options granted to the named executive officers in
fiscal 2011 that are reflected above were granted in May 2010
and are reflected in the Fiscal 2011 Summary Compensation and
the Fiscal 2011 Grants of Plan-Based Awards Tables in the Fiscal
2011 Information Concerning Executive Officers section below.
The size of the award was based on the officers target
grant size and his individual performance during fiscal 2010. As
described in our proxy statement for 2010, the grant size to
Mr. Smith was based on Mr. Smith exceeding his
individual performance goals for fiscal 2010. The grant sizes
for Messrs. Zev and Jeffrey Weiss and Mr. Beeder were
based on each of them significantly exceeding his individual
performance goals for fiscal 2010. Mr. Goulder, who was not
a named executive officer in fiscal 2010, received a grant, the
size of which was based on his meeting his individual
performance goals for fiscal 2010, which are described above
under Base Salaries.
The annual RSU grants to our named executive officers based on
fiscal 2011 performance were made on May 3, 2011, which is
in our 2012 fiscal year. The size of the grants was based on
each individuals target annual RSU grant size and his
individual performance rating, based on the officers
individual performance assessment described above under the
heading Base Salaries. Because the RSUs granted to
each of the named executive officers were granted in fiscal
2012, they are not reflected in the Fiscal 2011 Summary
Compensation or the Fiscal 2011 Grants of Plan-Based Awards
Tables in the Fiscal 2011 Information Concerning Executive
Officers section below.
Performance
Shares
On April 17, 2009, the Compensation Committee approved a
performance share award program. The program is designed to
reward participants for successful execution of key strategic,
operational and business objectives that will produce
exceptional long-term performance and create significant value
for our shareholders. The performance share program, like the
Key Management Annual Incentive Plan, is intended to drive
operational performance while also driving shareholder value
creation, thereby better aligning the interests of our
executives with those of our shareholders.
Under the terms of the performance share program, in April 2009,
each of the named executive officers was granted the number of
performance shares set forth below under the column Total
Performance Share Grant. A portion of the total grant
could be earned with respect to performance in each of fiscal
2010 and 2011 and, under certain circumstances, with respect to
performance in fiscal 2012, in each case based on American
Greetings achieving at or between a threshold Corporate EBIT
goal of $130 million and a maximum Corporate EBIT goal of
$150 million (or $166.6 million and
$186.6 million, respectively as adjusted for fiscal 2011 by
the factors described above under the Key Management
Annual Incentive Plan General). Corporate EBIT
goals and results are calculated in the same manner as are
calculated under the Key Management Annual Incentive Plan;
however, the target, unadjusted goals of between
$130 million and $150 million are fixed for the
duration of the program, whereas, under the Key Management
Annual Incentive Plan, the goals, including the Corporate EBIT
goal, are evaluated and set annually. The Compensation Committee
set the Corporate EBIT goal in April 2009 at the same time it
established the financial goals under the Key Management Annual
Incentive Plan for fiscal 2009, intending the goals to be
significant stretch goals designed to be earned only upon
superior performance, performance well above the Corporate EBIT
goal under the Key Management Annual Incentive Plan. The number
of shares that could be earned by each of the named executive
officers was established at a level intended to result in the
total direct compensation we pay
37
to our executive officers being, on average, closer to the
market median, as it was determined at that time that our total
direct compensation program for named executive officers as a
group was below the market median due to our lower long-term
equity compensation programs.
Under the program, in each of fiscal 2010 and 2011, the named
executive officers could have been credited with the number of
shares set forth below based on whether we achieved the
Corporate EBIT goal. If we did not achieve the threshold goal,
no shares would have been credited; if we achieved the maximum
goal (as we did), the number of shares set forth below would be
(and actually was) credited; and for performance between the
threshold and maximum goal, the number of shares that may be
credited to an officer was to be interpolated. If the actual
Corporate EBIT results were below the maximum in either fiscal
2010 or 2011, to promote the continued long-term achievement of
the Corporate EBIT goal, the named executive officers were to
have had an opportunity to be credited with up to his maximum
amount based on fiscal 2012 Corporate EBIT performance. In an
effort to further align the long-term interests of our officers
with those of our shareholders, as well as to encourage
executive retention, shares credited to a named executive
officer upon achievement of performance goals must vest before
the officer is entitled to ownership of the shares. Under the
terms of grants, shares credited to an officer vest in equal
increments over two years, beginning with the fiscal year in
which the shares are credited.
In April 2011, the Compensation Committee reviewed actual
results for fiscal 2011 with respect to achievement of the
Corporate EBIT performance goal and determined that actual
Corporate EBIT, as adjusted by the factors described above under
Key Management Annual Incentive Plan
General, was $244.4 million, or approximately 131% of
the maximum adjusted Corporate EBIT target, resulting in the
maximum number of shares being credited to the named executive
officers as set forth below:
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|
|
|
|
|
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|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
Actual
|
|
|
|
|
|
|
|
|
|
|
Available
|
|
Number of
|
|
Number of
|
|
|
|
|
|
|
|
|
for Each of
|
|
Shares
|
|
Shares
|
|
|
Total Performance
|
|
|
|
Target EBIT Goal
|
|
2010 and
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Credited
|
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Available
|
Name
|
|
Share Grant
|
|
|
|
Unadjusted/Adjusted
|
|
2011 (#)
|
|
in 2011 (#)
|
|
for 2012 (#)
|
|
|
|
|
|
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($ in millions)
|
|
|
|
|
|
|
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Zev Weiss
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|
80,000 Class B
|
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Maximum
|
|
$150/$186.6
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|
|
40,000
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|
|
|
40,000
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|
|
|
0
|
|
|
|
Shares
|
|
Threshold
|
|
$130/$166.6
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|
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20,000
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|
|
|
|
|
|
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Stephen Smith
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36,000 Class A
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Maximum
|
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$150/$186.6
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18,000
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|
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18,000
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|
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0
|
|
|
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Shares
|
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Threshold
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$130/$166.6
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|
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9,000
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|
|
|
|
|
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Jeffrey Weiss
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68,000 Class B
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Maximum
|
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$150/$186.6
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34,000
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|
|
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34,000
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|
|
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0
|
|
|
|
Shares
|
|
Threshold
|
|
$130/$166.6
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17,000
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|
|
|
|
|
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John W. Beeder
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48,000 Class A
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Maximum
|
|
$150/$186.6
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|
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24,000
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|
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24,000
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|
|
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0
|
|
|
|
Shares
|
|
Threshold
|
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$130/$166.6
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|
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12,000
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|
|
|
|
|
|
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Michael Goulder
|
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48,000 Class B
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Maximum
|
|
$150/$186.6
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|
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24,000
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|
|
|
24,000
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|
|
|
0
|
|
|
|
Shares
|
|
Threshold
|
|
$130/$166.6
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|
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12,000
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|
|
|
|
|
|
|
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Because the maximum number of shares that could be earned with
respect to performance in each of fiscal 2010 and 2011 were
earned, all of the shares granted in April 2009 have been
credited to the account of the applicable named executive
officer. No remaining shares are available to be earned based on
performance during fiscal 2012.
Benefits
To offer competitive compensation packages, we provide our
executive officers a Supplemental Executive Retirement Plan, a
Retirement Profit Sharing and Savings Plan, and an Executive
Deferred Compensation Plan. The Supplemental Executive
Retirement Plan is designed to provide benefits that are
competitive with those offered by other comparable companies,
while requiring a meaningful tenure as an officer before
becoming eligible to receive benefits. Although all of our
employees meeting the requisite service requirements are
entitled to participate in the Retirement Profit Sharing and
Savings Plan, for officers at the Vice President level and
above, which includes all of the named executive officers, we
offer a benefit that permits those officers to contribute more
than the statutory maximum ($16,500 for 2010) under the
401(k)
38
savings component of the plan, and receive a corresponding match
on the additional contributions (40% of the first 6% of eligible
compensation deferred). Similarly, for our executives at the
Vice President level and above, which includes our named
executive officers, we offer a benefit under which participants
in the profit sharing component of the plan will receive an
additional profit sharing contribution based on a portion of the
executives base salary that exceeds the statutory
compensation limit. Both of these benefits are intended to
enable officers to take full advantage of the ability to earn
profit sharing contributions toward the executives
retirement, and to save on a tax deferred basis and receive
matching contributions, notwithstanding the limits imposed by
the Internal Revenue Code on compensation that can be taken into
account for purposes of determining contributions to a qualified
retirement plan, such as our Retirement Profit Sharing and
Savings Plan. As reflected in note 6 to the Fiscal 2011
Summary Compensation Table as well as in the Fiscal 2011
Nonqualified Deferred Compensation Table below, based on the
companys financial performance in fiscal 2011, during
fiscal 2012, we made profit sharing and matching contributions
to our employees, together with the associated maximizer and
restoration benefit, to the named executive officers.
Executive officers, including the named executive officers, are
also eligible to participate in our Executive Deferred
Compensation Plan, where officers are entitled to defer
compensation on a tax deferred basis. The cost of the benefit
provided under the deferred compensation program is de minimis.
Consequently, we generally do not consider the value of the
deferred compensation program in calculating the total
compensation provided to our named executive officers. These
plans are described in more detail in the narrative accompanying
the disclosure tables in the Fiscal 2011 Information Concerning
Executive Officers section below.
Our executive officers also participate in other benefit plans
provided by American Greetings, including medical, dental and
life insurance. Except as described below under
Perquisites and Other Benefits, their participation
is generally on the same terms as other employees.
Perquisites
and Other Benefits
We provide our executive officers with certain personal benefits
and perquisites. The value of personal benefits and perquisites,
and the related incremental cost to American Greetings, has
historically not been significant. The primary personal benefits
and perquisites for our executive officers are:
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Company-provided car for both business and
personal use, where we also pay the operating costs, including
maintenance and insurance.
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Company products providing executive officers
with free company products from our company store for personal
use (all non-officer employees may purchase company products at
a significant discount from the retail cost).
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|
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Executive life insurance providing the
executive officers with a universal life insurance policy of
three times their annual base salary, and reimbursing them for
the payment of taxes on income attributed to the executive for
the value of universal life insurance premiums paid by us. Upon
termination of employment, each officer may assume his or her
insurance policy, including premium payment obligations, in
which case such officer will be entitled to any cash surrender
value attributable to the policy, which has historically been de
minimis.
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|
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Accidental death and dismemberment insurance
providing each executive officer with a supplemental accidental
death and dismemberment policy in an amount equal to $275,000.
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Business travel accident insurance providing
each executive officer with a business travel accident policy of
the lesser of (1) three times his or her annual salary or
(2) $3 million subject to a minimum of $250,000 for
the officer, and in certain instances, $75,000 for the
officers spouse and $25,000 for each of the officers
dependent children.
|
In connection with hiring new executive officers who must
relocate, we provide financial assistance associated with such
relocation, including paying for moving expenses as well as for
the executive officers temporary housing. In connection
with his transition to Cleveland, Ohio, during fiscal 2011, we
reimbursed
39
Mr. Beeder for the cost of his and his wifes
commuting between his home and Cleveland, Ohio, as well as
temporary housing (including rent and utilities).
Severance
and Change in Control Agreements
We do not offer separate change in control agreements for our
officers. However, each of Messrs. Beeder and Goulder has
provisions in his employment agreement that provide for certain
compensation and other benefits if he separates employment upon
or following a change in control. In addition, when we retained
Mr. Smith as our Vice President and Treasurer in April
2003, we agreed to provide him certain severance benefits if
terminated by us without cause. We also have a general severance
policy under which executive officers are entitled to severance
benefits if they are terminated involuntarily. These
arrangements for our named executive officers are described in
more detail in the section below entitled Potential
Payments Upon Termination or Change in Control.
To attract the highest caliber of officers, from time to time we
have found it necessary to offer severance arrangements that
compensate our officers upon a change in control or their
termination by us for reasons other than cause. Additionally,
when offering arrangements entitling our officers to
compensation upon separation following a change in control, we
have considered the nature of the position, the need to fill the
position and the ability to attract the senior executive
officer. These severance arrangements following a change in
control have been structured with a double trigger,
meaning the severance is only paid if (1) we undergo a
transaction that is deemed a change in control and (2) the
officer is terminated or constructively terminated. We believe
this double trigger requirement maximizes shareholder value
because it ensures the officer does not receive an unintended
windfall by receiving a severance payment while maintaining his
salaried position. We believe these arrangements are reasonable
means to protect the officers in the event of a change in
control and align their interests with our shareholders because
providing change in control benefits should eliminate, or at
least reduce, the reluctance of senior management to pursue
potential change in control transactions that may be in the best
interests of shareholders. Relative to the overall value of
American Greetings, we believe that these potential change in
control and severance benefits are minor.
Tax
Deductibility of Executive Compensation
Limitations on deductibility of compensation may occur under
Section 162(m) of the Internal Revenue Code, which
generally limits the tax deductibility of compensation paid by a
public company to its Chief Executive Officer and certain other
highly compensated executive officers to $1 million in the
year the compensation becomes taxable to the executive officer.
There is an exception to the limit on deductibility for
performance-based compensation that meets certain requirements.
Although tax deductibility of compensation is preferred, it is
not a primary objective of our compensation programs. We believe
that achieving our compensation objectives set forth above is
more important than the benefit of tax deductibility, and we
reserve the right to maintain flexibility in how we compensate
our executive officers that may result in limiting the
deductibility of amounts of compensation from time to time.
40
COMPENSATION
COMMITTEE REPORT
The Compensation and Management Development Committee has
reviewed and discussed the Compensation Discussion and Analysis
with management and, based on such review and discussion, the
Compensation Committee recommended to the Board that the
Compensation Discussion and Analysis be included in this Proxy
Statement and incorporated by reference in American
Greetings Annual Report on
Form 10-K
for the year ended February 28, 2011.
The
Compensation and Management Development Committee
|
|
|
Scott S. Cowen (Chairman)
|
|
Jerry Sue Thornton
|
Jeffrey D. Dunn
|
|
Charles A. Ratner
|
Except for the American Greetings Annual Report on
Form 10-K
for the year ended February 28, 2011 or as expressly set
forth by specific reference in any future filing, the foregoing
Report of the Compensation and Management Development Committee
shall not be incorporated by reference into any previous or
future filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934.
41
RISKS
RELATED TO COMPENSATION POLICIES AND PRACTICES
In April 2011, we conducted a risk assessment of our
compensation policies and practices for our employees, including
those relating to our executive compensation programs. Mercer,
the Compensation Committees outside consultant, assisted
us in conducting the assessment. Our risk assessment included a
detailed qualitative and quantitative analysis of our
compensation and benefit programs to which employees at all
levels of the organization may participate, including our
executive officers. We also considered how our compensation
programs compare, from a design perspective, to compensation
programs maintained by other companies. Based on our assessment,
we believe that our compensation and benefit programs have been
appropriately designed to attract and retain talent and properly
incent employees. Although our programs are generally designed
to
pay-for-performance
and provide incentive-based compensation, the programs contain
various mitigating factors to ensure our employees, including
our named executive officers, are not encouraged to take
unnecessary risks in managing our business. These factors
include:
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|
|
|
|
Oversight of programs (or components of programs) by committees
of the Board, including the Compensation Committee;
|
|
|
|
Discretion provided to the Board and the Compensation Committee
(including negative discretion) to set targets, monitor
performance and determine final payouts;
|
|
|
|
Oversight of programs (or components of programs) by a
broad-based group of functions within the organization,
including Human Resources, Finance, Audit and Legal and at
multiple levels within the organization (both corporate and
business unit/region);
|
|
|
|
A mixture of programs that provide focus on both short- and
long-term goals and that provide a mixture of cash and equity
compensation;
|
|
|
|
Customary caps on the maximum payouts available under certain
programs, including the Key Management Annual Incentive Plan;
|
|
|
|
Incentives focused primarily on the use of reportable and
broad-based financial metrics (such as EBIT, Total Revenue, and
EPS), including a mixture of consolidated and business-specific
goals, with no one factor receiving an excessive weighting;
|
|
|
|
Service-based vesting conditions with respect to equity
grants; and
|
|
|
|
The significant long-term ownership interests in the company
held by certain of our key executive officers.
|
We discussed our findings of our risk assessment with the
Compensation Committee. We believe that our compensation
policies and practices do not encourage excessive or unnecessary
risk taking and are not reasonably likely to have a material
adverse effect on American Greetings.
42
FISCAL
2011 INFORMATION CONCERNING EXECUTIVE OFFICERS
Summary
Compensation
The table below summarizes the total compensation for the named
executive officers for the fiscal year ended February 28,
2011 (and prior fiscal years, as applicable). Amounts listed
under the Non-Equity Incentive Plan Compensation
column below were determined by the Compensation Committee at
its April 2011 meeting and, to the extent not deferred by the
executive, were paid out shortly thereafter.
Fiscal
2011 Summary Compensation Table
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Incentive Plan
|
|
Compensation
|
|
All Other
|
|
|
|
|
|
|
Salary
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Earnings
|
|
Compensation
|
|
Total
|
Name and Principal Position
|
|
Year
|
|
($)(1)
|
|
($)(2)
|
|
($)(3)
|
|
($)(4)
|
|
($)(5)
|
|
($)(6)
|
|
($)
|
|
Zev Weiss
|
|
|
2011
|
|
|
$
|
944,495
|
|
|
$
|
368,769
|
|
|
$
|
630,278
|
|
|
$
|
1,716,715
|
|
|
$
|
125,212
|
|
|
$
|
96,240
|
|
|
$
|
3,881,709
|
|
Chief Executive Officer
|
|
|
2010
|
|
|
$
|
921,460
|
|
|
$
|
674,302
|
|
|
$
|
233,126
|
|
|
$
|
921,459
|
|
|
$
|
449,453
|
|
|
$
|
71,183
|
|
|
$
|
3,270,983
|
|
|
|
|
2009
|
|
|
$
|
916,986
|
|
|
$
|
628,637
|
|
|
$
|
325,006
|
|
|
|
|
|
|
$
|
67,380
|
|
|
$
|
36,518
|
|
|
$
|
1,974,527
|
|
Stephen J. Smith
|
|
|
2011
|
|
|
$
|
418,276
|
|
|
$
|
76,853
|
|
|
$
|
133,803
|
|
|
$
|
502,902
|
|
|
$
|
43,009
|
|
|
$
|
51,823
|
|
|
$
|
1,226,666
|
|
Senior Vice President
|
|
|
2010
|
|
|
$
|
386,101
|
|
|
$
|
260,310
|
|
|
$
|
64,086
|
|
|
$
|
513,514
|
|
|
$
|
85,503
|
|
|
$
|
52,870
|
|
|
$
|
1,362,384
|
|
and Chief Financial Officer
|
|
|
2009
|
|
|
$
|
381,334
|
|
|
|
|
|
|
$
|
69,002
|
|
|
$
|
26,693
|
|
|
$
|
27,609
|
|
|
$
|
24,569
|
|
|
$
|
529,207
|
|
Jeffrey Weiss
|
|
|
2011
|
|
|
$
|
739,300
|
|
|
$
|
277,315
|
|
|
$
|
472,709
|
|
|
$
|
1,209,376
|
|
|
$
|
65,681
|
|
|
$
|
57,183
|
|
|
$
|
2,821,564
|
|
President and Chief
|
|
|
2010
|
|
|
$
|
721,268
|
|
|
$
|
563,572
|
|
|
$
|
174,845
|
|
|
$
|
649,141
|
|
|
$
|
382,573
|
|
|
$
|
60,947
|
|
|
$
|
2,552,346
|
|
Operating Officer
|
|
|
2009
|
|
|
$
|
717,767
|
|
|
$
|
471,478
|
|
|
$
|
243,800
|
|
|
|
|
|
|
$
|
30,662
|
|
|
$
|
30,352
|
|
|
$
|
1,494,059
|
|
John W. Beeder
|
|
|
2011
|
|
|
$
|
483,334
|
|
|
$
|
131,270
|
|
|
$
|
231,377
|
|
|
$
|
741,473
|
|
|
$
|
71,798
|
|
|
$
|
89,821
|
|
|
$
|
1,749,073
|
|
Senior Vice President
|
|
|
2010
|
|
|
$
|
440,000
|
|
|
$
|
347,081
|
|
|
$
|
88,657
|
|
|
$
|
704,000
|
|
|
$
|
22,323
|
|
|
$
|
125,692
|
|
|
$
|
1,727,753
|
|
Executive Sales and
Marketing Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael L. Goulder
|
|
|
2011
|
|
|
$
|
489,678
|
|
|
$
|
105,016
|
|
|
$
|
185,103
|
|
|
$
|
672,857
|
|
|
$
|
60,371
|
|
|
$
|
49,490
|
|
|
$
|
1,562,515
|
|
Senior Vice President
|
|
|
2010
|
|
|
$
|
477,735
|
|
|
$
|
347,081
|
|
|
$
|
88,657
|
|
|
$
|
687,938
|
|
|
$
|
119,115
|
|
|
$
|
45,595
|
|
|
$
|
1,766,120
|
|
Executive Supply Chain Officer
|
|
|
2009
|
|
|
$
|
473,943
|
|
|
|
|
|
|
$
|
137,220
|
|
|
|
|
|
|
$
|
30,662
|
|
|
$
|
26,247
|
|
|
$
|
668,072
|
|
|
|
|
(1) |
|
The amounts included in this column for fiscal 2011 reflect the
base salaries actually paid to or earned by the named executive
officers during fiscal 2011. As described in the Compensation
Discussion and Analysis section under Base Salaries,
increases in base salaries are effective on May 1. |
|
(2) |
|
The amounts for fiscal 2011 reflect the aggregate grant date
fair value of stock awards computed in accordance with Financial
Accounting Standards Board Accounting Standards Codification
Topic 718 Compensation Stock
Compensation (Topic 718), excluding the impact
of estimated forfeitures. For fiscal 2011, the amounts represent
RSUs granted to each of the named executive officers in April
2010 as described in the Compensation Discussion and Analysis
section under the heading Analysis of Compensation
Elements Paid to Named Executive Officers Long-Term
Incentive Compensation RSUs and Stock Options.
Assumptions used in calculating the amounts are included in
footnote 15 to our audited financial statements for fiscal 2011,
included in our Annual Report on
Form 10-K
filed with the SEC on April 29, 2011. While these amounts
reflect the aggregate grant date fair value computed in
accordance with Topic 718, they may not correspond to the actual
value that will be recognized by the named executive officers.
The actual amount, if any, realized will depend on the number of
shares, if any, vested and the market price of our common shares
at that time. For additional information regarding grants of
restricted stock units, see Analysis of Compensation
Elements Paid to Named Executive Officers Long-Term
Incentive Compensation. |
|
(3) |
|
The amounts for fiscal 2011 reflect the aggregate grant date
fair value of stock option awards computed in accordance with
Topic 718, excluding the impact of estimated forfeitures.
Assumptions used in calculating amounts for fiscal 2011 are
included in footnote 15 to our audited financial statements for
fiscal 2011, included in our Annual Report on
Form 10-K
filed with the SEC on April 29, 2011. While these amounts
reflect the aggregate grant date fair value computed in
accordance with Topic 718, they may not correspond to the actual
value that will be recognized by the named executive officers.
The actual amount, if any, realized |
43
|
|
|
|
|
upon the exercise of stock options will depend upon the market
price of our common shares relative to the exercise price per
share of the stock option at the time of exercise. For
additional information regarding such grants, see Analysis
of Compensation Elements Paid to Named Executive
Officers Long-Term Incentive
Compensation RSUs and Stock Options. |
|
(4) |
|
The amounts in this column for fiscal 2011 reflect the cash
awards to the named individuals under the Key Management Annual
Incentive Plan, which is discussed in further detail in
Analysis of Compensation Elements Paid to Named Executive
Officers Key Management Annual Incentive Plan. |
|
(5) |
|
The amounts in this column for fiscal 2011 reflect the actuarial
change in the present value of the named executive
officers benefits under our Supplemental Executive
Retirement Plan during the respective fiscal year. The amounts
include benefits that the named executive officer may not
currently be entitled to receive because such amounts are not
vested. Other than the Supplemental Executive Retirement Plan,
none of the named executive officers participate in any defined
benefit or actuarial pension plan. See the Pension
Benefits in Fiscal 2011 section below for additional
information with respect to fiscal 2011, including the present
value assumptions used in this calculation. |
|
(6) |
|
The following table describes each component of the amount
included under the All Other Compensation column
with respect to fiscal 2011: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Matching and
|
|
Maximizer
|
|
|
|
|
|
|
|
|
Profit
|
|
and
|
|
Value of
|
|
|
|
|
|
|
Sharing
|
|
Restoration
|
|
Life Insurance
|
|
Other
|
|
|
Tax Payments
|
|
Contributions
|
|
Benefits
|
|
Premiums
|
|
Benefits
|
Name
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
Zev Weiss
|
|
$
|
7,833
|
|
|
$
|
14,458
|
|
|
$
|
42,118
|
|
|
$
|
10,706
|
|
|
$
|
21,126
|
|
Stephen J. Smith
|
|
$
|
3,821
|
|
|
$
|
14,458
|
|
|
$
|
10,693
|
|
|
$
|
8,042
|
|
|
$
|
14,809
|
|
Jeffrey Weiss
|
|
$
|
4,463
|
|
|
$
|
14,458
|
|
|
$
|
15,782
|
|
|
$
|
9,377
|
|
|
$
|
13,103
|
|
John W. Beeder
|
|
$
|
5,122
|
|
|
$
|
14,458
|
|
|
$
|
12,385
|
|
|
$
|
7,031
|
|
|
$
|
50,825
|
|
Michael L. Goulder
|
|
$
|
3,897
|
|
|
$
|
14,458
|
|
|
$
|
11,771
|
|
|
$
|
8,200
|
|
|
$
|
11,164
|
|
|
|
|
(a) |
|
Reflects amounts reimbursed for the payment of taxes on income
attributed to the officer for the value of universal life
insurance premiums paid by American Greetings. |
|
(b) |
|
This column reports (i) company matching contributions with
respect to fiscal 2011 to the named executive officers
401(k) savings account under our Retirement Profit Sharing and
Savings Plan of 40% of the first 6% of pay up to the limitations
imposed under the Internal Revenue Code; and (ii) profit
sharing contributions with respect to fiscal 2011 under our
Retirement Profit Sharing and Savings Plan as a percentage of
compensation. |
|
(c) |
|
This column reports the maximizer and restoration benefits
contributed by us with respect to fiscal 2011 to the named
executive officers account under the Executive Deferred
Compensation Plan. Refer to the discussion of the maximizer and
restoration benefits under the Nonqualified Deferred
Compensation for Fiscal 2011 section below. |
|
(d) |
|
This column represents premiums paid by American Greetings with
respect to universal life insurance policies for the benefit of
the named executive officer. Upon termination of employment,
each officer may assume his insurance policy, including premium
payment obligations, in which case such officer will be entitled
to any cash surrender value attributable to the policy, which
has historically been de minimis. |
|
(e) |
|
This column includes the aggregate incremental cost to American
Greetings of the following perquisites or benefits for each
named executive officer during fiscal 2011, none of which,
except as described below, individually exceeded the greater of
$25,000 or 10% of the total perquisites provided to the named
executive officer: company car, free company products, and
accidental death and dismemberment insurance. From time to time,
the named executive officers have used company tickets for
sporting events and other entertainment venues with a guest or
family member. There was no incremental cost to us for these
tickets. With respect to Mr. John Beeder, the amount also
includes $38,610 paid to him in fiscal |
44
|
|
|
|
|
2011 to reimburse Mr. Beeder for the cost for him and his
wife to commute between his home and Cleveland, Ohio, as well as
temporary housing (including rent and utilities). |
Grants of
Plan-Based Awards in Fiscal 2011
The table below provides the following information about equity
and non-equity awards granted to the named executive officers in
fiscal 2011: (1) the grant date; (2) the date the
grant was approved by our Compensation Committee; (3) the
estimated possible payouts under non-equity incentive plan
awards, which consist of potential payouts under our Key
Management Annual Incentive Plan for the fiscal 2011 performance
period; (4) all other stock awards, which consist of
time-based restricted stock units awarded to the named executive
officers; (5) all other option awards, which consist of the
number of shares underlying time-based stock options awarded to
the named executive officers; (6) the exercise price of the
stock option awards, which reflects the closing price of
American Greetings stock on the date of grant; and
(7) the grant date fair value of each equity award computed
under Topic 718.
Fiscal
2011 Grants of Plan-Based Awards Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
|
|
All
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Awards:
|
|
Exercise
|
|
Date Fair
|
|
|
|
|
|
|
Estimated Possible Payouts
|
|
Number of
|
|
Number of
|
|
or Base
|
|
Value of
|
|
|
|
|
|
|
Under Non-Equity Incentive
|
|
Shares
|
|
Securities
|
|
Price of
|
|
Stock and
|
|
|
|
|
|
|
Plan
Awards(2)
|
|
of Stock or
|
|
Underlying
|
|
Option
|
|
Option
|
|
|
Grant
|
|
Approval
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Units
|
|
Options
|
|
Awards
|
|
Awards
|
Name
|
|
Date
|
|
Date(1)
|
|
($)
|
|
($)
|
|
($)
|
|
(#)(3)
|
|
(#)(4)
|
|
($/Sh)
|
|
($)(5)
|
|
Zev Weiss
|
|
|
|
|
|
|
|
$
|
94,450
|
|
|
$
|
944,495
|
|
|
$
|
1,888,991
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/3/10
|
|
|
4/15/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,625
|
|
|
|
|
|
|
|
|
|
|
$
|
368,769
|
|
|
|
5/3/10
|
|
|
4/15/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,500
|
|
|
$
|
24.69
|
|
|
$
|
630,278
|
|
Stephen J. Smith
|
|
|
|
|
|
|
|
$
|
29,279
|
|
|
$
|
292,793
|
|
|
$
|
585,587
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/3/10
|
|
|
4/15/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,220
|
|
|
|
|
|
|
|
|
|
|
$
|
76,853
|
|
|
|
5/3/10
|
|
|
4/15/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,650
|
|
|
$
|
24.69
|
|
|
$
|
133,803
|
|
Jeffrey Weiss
|
|
|
|
|
|
|
|
$
|
66,537
|
|
|
$
|
665,370
|
|
|
$
|
1,330,739
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/3/10
|
|
|
4/15/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,750
|
|
|
|
|
|
|
|
|
|
|
$
|
277,315
|
|
|
|
5/3/10
|
|
|
4/15/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46,875
|
|
|
$
|
24.69
|
|
|
$
|
472,709
|
|
John W. Beeder
|
|
|
|
|
|
|
|
$
|
38,667
|
|
|
$
|
386,667
|
|
|
$
|
773,334
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/3/10
|
|
|
4/15/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,500
|
|
|
|
|
|
|
|
|
|
|
$
|
131,270
|
|
|
|
5/3/10
|
|
|
4/15/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,875
|
|
|
$
|
24.69
|
|
|
$
|
231,377
|
|
Michael L. Goulder
|
|
|
|
|
|
|
|
$
|
39,174
|
|
|
$
|
391,743
|
|
|
$
|
783,485
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/3/10
|
|
|
4/15/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,400
|
|
|
|
|
|
|
|
|
|
|
$
|
105,016
|
|
|
|
5/3/10
|
|
|
4/15/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,500
|
|
|
$
|
24.69
|
|
|
$
|
185,103
|
|
|
|
|
(1) |
|
Reflects the date on which the option and RSU awards were
approved by the Compensation Committee. The May 3, 2010
annual equity grants were set in advance to follow the filing of
our Annual Report on
Form 10-K.
For a description of the stock option grant policy, refer to the
description of our option grant program in the Compensation
Discussion and Analysis section under Analysis of
Compensation Elements Paid to Named Executive
Officers Long-Term Incentive Compensation. |
|
(2) |
|
These columns show the potential value of the payout for each
named executive officer under our Key Management Annual
Incentive Plan at threshold, target and maximum levels. The
award levels are based on a percentage of the individuals
actual base salary earned during fiscal 2011. In accordance with
the terms of the Key Management Annual Incentive Plan, we have
assumed (a) the threshold award amount will be earned if
the business unit and corporate performance measures are not
achieved at 90% of the financial goals but the individuals
performance exceeds his performance goals; (b) the target
award amount will be earned if the Corporate EPS, Corporate EBIT
and the Total Revenue performance measures are achieved at 100%
of the financial goals and the individual meets his performance
goals; and (c) the maximum award amount will be earned if
the Corporate EPS and Corporate EBIT financial goals are
achieved at 125%, the Total Revenue financial goal is achieved
at not less than 97% and the individual |
45
|
|
|
|
|
significantly exceeds his performance goals. The Key Management
Annual Incentive Plan, including the target levels, business
measurements, and performance goals, is described in the
Compensation Discussion and Analysis section under
Analysis of Compensation Elements Paid to Named Executive
Officers Key Management Annual Incentive Plan. |
|
(3) |
|
The amounts in this column reflect the annual RSU grant made to
each named executive officer. The Class B RSU grants to
Messrs. Zev and Jeffrey Weiss will vest in approximately
equal increments on each of the first, second and third
anniversary dates of grant. The Class A RSU grants to
Messrs. Smith, Beeder and Goulder will vest in equal
amounts on each of the first and second anniversaries of the
date of grant. The annual RSU grants are described in the
Compensation Discussion and Analysis section under
Analysis of Compensation Elements Paid to Named Executive
Officers Long-Term Incentive
Compensation RSUs and Stock Options. |
|
(4) |
|
The amounts in this column reflect the annual stock option grant
made to each named executive officer. The grants to
Messrs. Zev and Jeffrey Weiss of options to purchase
Class B common shares will vest in approximately equal
increments on each of the first, second and third anniversary
dates of grant. Messrs. Smith, Beeder and Goulder received
options to purchase Class A common shares, vesting in equal
amounts on each of the first and second anniversaries of the
date of grant. All options have an exercise price equal to the
closing market price of the Class A common shares on the
date of grant. The annual stock option grants are described in
the Compensation Discussion and Analysis section under
Analysis of Compensation Elements Paid to Named Executive
Officers Long-Term Incentive
Compensation RSUs and Stock Options. |
|
(5) |
|
The amounts in this column reflect the aggregate grant date fair
value of stock options and RSUs granted to the named executive
officers in fiscal 2011, as calculated under Topic 718.
Assumptions used in calculating these amounts are included in
footnote 15 to our audited financial statements for fiscal 2011
included in our Annual Report on
Form 10-K
filed with the SEC on April 29, 2011. While these amounts
reflect the aggregate grant date fair value computed in
accordance with Topic 718, they may not correspond to the actual
value that will be recognized by the named executive officers.
The actual amount, if any, realized upon the exercise of stock
options will depend upon the market price of our common shares
relative to the exercise price per share of the stock option at
the time of exercise. The actual amount, if any, realized with
respect to RSUs will depend on the number of shares, if any,
that vest and the market price of our common shares on the date
of vesting. |
Employment
Agreements
We have entered into employment agreements with each of our
named executive officers. In addition to the matters described
below, each of these agreements provide for certain compensation
to be paid to the named executive officer following the
termination of his employment under certain circumstances. A
description of these provisions is contained in the
Potential Payments Upon Termination or Change in
Control section below.
Mr. Zev Weisss employment agreement, dated
May 1, 1997, provides for an annual base salary of not less
than $70,716 plus additional compensation as the Board,
Executive Committee or the Chair of the Executive Committee may
determine. Mr. Zev Weisss base salary as of
February 28, 2011 was $949,103. Mr. Stephen
Smiths employment agreement, dated August 14, 2003,
provides for an annual base salary of not less than $175,000
plus additional compensation as the Board, Executive Committee
or the Chair of the Executive Committee may determine.
Mr. Smiths base salary as of February 28, 2011
was $424,711. Mr. Jeffrey Weisss employment
agreement, dated June 1, 1991, provides for an annual base
salary of not less than $70,000 plus additional compensation as
the Board, Executive Committee or the Chair of the Executive
Committee may determine. Mr. Jeffrey Weisss base
salary as of February 28, 2011 was $742,906.
Mr. John Beeders employment agreement, dated
June 12, 2008, provides for an annual base salary of at
least $440,000, which salary may be increased based on
Mr. Beeders performance. Mr. Beeders base
salary as of February 28, 2011 was $492,000. During his
employment, he is entitled to participate in our Key Management
Annual Incentive Plan at the Senior Vice President level; our
equity grant plans at the Senior Vice President level; our
flexible benefits program; and the Retirement Profit Sharing and
Savings Plan.
46
Mr. Beeder is eligible to receive certain benefits under
the companys relocation policy for a period of
24 months following the date of his agreement.
Mr. Beeder is also entitled to receive certain other
benefits normally provided to other Senior Vice Presidents,
including use of a company car.
Mr. William Goulders employment agreement, dated
October 17, 2002, provides for an annual base salary of at
least $330,000, which salary may be increased based on
Mr. Goulders performance. Mr. Goulders
base salary as of February 28, 2011 was $492,067. During
his employment, he is entitled to participate in our Key
Management Annual Incentive Plan at the Senior Vice President
level; our equity grant plans at the Senior Vice President
level; our flexible benefits program; and the Retirement Profit
Sharing and Savings Plan. Mr. Goulder is eligible to
receive certain other benefits normally provided to other Senior
Vice Presidents, including use of a company car.
Under the terms of their agreements, each of Messrs. Zev
Weiss, Jeffrey Weiss, Smith, Beeder and Goulder agreed, after
leaving American Greetings for any reason, that he will not
work, directly or indirectly, for any of our competitors in the
United States or Canada for a period of twelve months. The
agreements also contain customary confidentiality provisions.
The benefits that the named executive officers will receive upon
a termination of their employment or a change in control are
discussed below under Potential Payments Upon Termination
or Change in Control. A description of the terms of stock
options, restricted stock units and performance share units
awarded to our named executive officers is included in the
Compensation Discussion and Analysis section.
Outstanding
Equity Awards at Fiscal 2011 Year-End
The following table provides information on the holdings of
stock options and stock awards by the named executive officers
as of February 28, 2011. This table includes unexercised
and unvested stock options, unvested RSUs and performance shares
with performance conditions that have not yet been satisfied or
that have not otherwise vested. Each equity grant is shown
separately for each named executive officer. The vesting
schedule for each unvested grant is shown in the footnotes to
this table, based on the option or stock award grant date.
Except as otherwise noted, the equity awards relate to our
Class A common shares. The market value of the stock awards
is based on the closing market price of American Greetings
Class A common shares as of February 28, 2011, which
was $21.65. The performance shares are subject to specified
performance objectives over the performance period. The market
value as of February 28, 2011, shown below, assumes the
satisfaction of these objectives.
47
Outstanding
Equity Awards at Fiscal 2011 Year-End Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
Plan
|
|
Market or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
Awards:
|
|
Payout
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares or
|
|
Number of
|
|
Value of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Units of
|
|
Unearned
|
|
Unearned
|
|
|
|
|
Number of
|
|
Number of
|
|
|
|
|
|
|
|
Shares or
|
|
Stock
|
|
Shares, Units
|
|
Shares,
|
|
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
|
|
Units of
|
|
That
|
|
or Other
|
|
Units or
|
|
|
|
|
Underlying
|
|
Underlying
|
|
Option
|
|
|
|
Stock
|
|
Stock
|
|
Have
|
|
Rights That
|
|
Other Rights
|
|
|
Option
|
|
Unexercised
|
|
Unexercised
|
|
Exercise
|
|
Option
|
|
Award
|
|
That Have
|
|
Not
|
|
Have Not
|
|
That Have
|
|
|
Grant
|
|
Options (#)
|
|
Options (#)
|
|
Price
|
|
Expiration
|
|
Grant
|
|
Not Vested
|
|
Vested
|
|
Vested
|
|
Not Vested
|
Name
|
|
Date
|
|
Exercisable
|
|
Unexercisable
|
|
($)
|
|
Date
|
|
Date
|
|
(#)
|
|
($)
|
|
(#)
|
|
($)
|
|
Zev Weiss
|
|
|
3/3/2003
|
|
|
|
33,334
|
|
|
|
|
|
|
$
|
13.15
|
|
|
|
3/3/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/2/2004
|
|
|
|
7,081
|
|
|
|
|
|
|
$
|
22.26
|
|
|
|
4/4/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/2/2004
|
(1)
|
|
|
5,694
|
|
|
|
|
|
|
$
|
22.26
|
|
|
|
4/4/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/3/2004
|
(1)
|
|
|
66,666
|
|
|
|
|
|
|
$
|
20.51
|
|
|
|
5/3/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/16/2005
|
(1)
|
|
|
100,000
|
|
|
|
|
|
|
$
|
24.73
|
|
|
|
5/16/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/5/2005
|
(1)
|
|
|
25,473
|
|
|
|
|
|
|
$
|
26.84
|
|
|
|
5/3/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/15/2006
|
(1)
|
|
|
100,000
|
|
|
|
|
|
|
$
|
22.65
|
|
|
|
5/15/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/22/2007
|
(1)
|
|
|
100,000
|
|
|
|
|
|
|
$
|
25.57
|
|
|
|
5/2/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/1/2008
|
(1)
|
|
|
66,667
|
|
|
|
33,333
|
(2)
|
|
$
|
18.12
|
|
|
|
5/1/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/1/2009
|
(1)
|
|
|
8,500
|
|
|
|
66,000
|
(3)
|
|
$
|
7.73
|
|
|
|
5/1/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/3/2010
|
(1)
|
|
|
|
|
|
|
62,500
|
(4)
|
|
$
|
24.69
|
|
|
|
5/3/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/17/2009
|
|
|
|
20,000
|
(9)
|
|
$
|
433,000
|
|
|
|
40,000
|
(11)
|
|
$
|
866,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/3/2010
|
|
|
|
15,625
|
(10)
|
|
$
|
388,281
|
|
|
|
|
|
|
|
|
|
|
|
Stephen J. Smith
|
|
|
5/16/2005
|
|
|
|
8,750
|
|
|
|
|
|
|
$
|
24.73
|
|
|
|
5/16/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/15/2006
|
|
|
|
8,050
|
|
|
|
|
|
|
$
|
22.65
|
|
|
|
5/15/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/26/2006
|
|
|
|
15,000
|
|
|
|
|
|
|
$
|
23.98
|
|
|
|
12/26/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/2/2007
|
|
|
|
22,000
|
|
|
|
|
|
|
$
|
25.57
|
|
|
|
5/2/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/1/2009
|
|
|
|
12,650
|
|
|
|
12,650
|
(5)
|
|
$
|
7.73
|
|
|
|
5/1/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/3/2010
|
|
|
|
|
|
|
|
12,650
|
(6)
|
|
$
|
24.69
|
|
|
|
5/3/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/17/2009
|
|
|
|
9,000
|
(9)
|
|
$
|
194,850
|
|
|
|
18,000
|
(11)
|
|
$
|
389,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/3/2010
|
|
|
|
3,220
|
(10)
|
|
$
|
69,713
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey Weiss
|
|
|
4/2/2004
|
(1)
|
|
|
5,215
|
|
|
|
|
|
|
$
|
22.26
|
|
|
|
4/4/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/16/2005
|
(1)
|
|
|
75,000
|
|
|
|
|
|
|
$
|
24.73
|
|
|
|
5/16/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/5/2005
|
(1)
|
|
|
10,317
|
|
|
|
|
|
|
$
|
26.84
|
|
|
|
5/3/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/15/2006
|
(1)
|
|
|
75,000
|
|
|
|
|
|
|
$
|
22.65
|
|
|
|
5/15/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/2/2007
|
(1)
|
|
|
75,000
|
|
|
|
|
|
|
$
|
25.57
|
|
|
|
5/2/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/1/2008
|
(1)
|
|
|
|
|
|
|
25,000
|
(2)
|
|
$
|
18.12
|
|
|
|
5/1/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/1/2009
|
(1)
|
|
|
|
|
|
|
49,500
|
(3)
|
|
$
|
7.73
|
|
|
|
5/1/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/3/2010
|
(1)
|
|
|
|
|
|
|
46,875
|
(7)
|
|
$
|
24.69
|
|
|
|
5/3/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/17/2009
|
|
|
|
17,000
|
(9)
|
|
$
|
368,050
|
|
|
|
34,000
|
(11)
|
|
$
|
736,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/3/2010
|
|
|
|
11,750
|
(10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John W. Beeder
|
|
|
5/1/2009
|
|
|
|
|
|
|
|
17,500
|
(5)
|
|
$
|
7.73
|
|
|
|
5/1/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/3/2010
|
|
|
|
|
|
|
|
21,875
|
(8)
|
|
$
|
24.69
|
|
|
|
5/3/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/17/2009
|
|
|
|
12,000
|
(9)
|
|
$
|
259,800
|
|
|
|
24,000
|
(11)
|
|
$
|
519,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/3/2010
|
|
|
|
5,500
|
(10)
|
|
$
|
119,075
|
|
|
|
|
|
|
|
|
|
|
|
Michael L. Goulder
|
|
|
5/3/2004
|
|
|
|
22,000
|
|
|
|
|
|
|
$
|
20.51
|
|
|
|
5/3/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/26/2004
|
|
|
|
13,000
|
|
|
|
|
|
|
$
|
22.82
|
|
|
|
7/26/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/16/2005
|
|
|
|
43,750
|
|
|
|
|
|
|
$
|
24.73
|
|
|
|
5/16/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/15/2006
|
|
|
|
40,250
|
|
|
|
|
|
|
$
|
22.65
|
|
|
|
5/15/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/2/2007
|
|
|
|
43,750
|
|
|
|
|
|
|
$
|
25.57
|
|
|
|
5/2/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/1/2008
|
|
|
|
43,750
|
|
|
|
|
|
|
$
|
18.12
|
|
|
|
5/1/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/1/2009
|
|
|
|
17,500
|
|
|
|
17,500
|
(5)
|
|
$
|
7.73
|
|
|
|
5/1/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/3/2010
|
|
|
|
|
|
|
|
17,500
|
(6)
|
|
$
|
24.69
|
|
|
|
5/3/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/17/2009
|
|
|
|
12,000
|
(9)
|
|
$
|
259,800
|
|
|
|
24,000
|
(11)
|
|
$
|
519,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/3/2010
|
|
|
|
4,400
|
(10)
|
|
$
|
95,260
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Represents options to purchase Class B common shares. |
|
|
(2) |
|
These options vest on the third anniversary of the date of grant. |
48
|
|
|
(3) |
|
50% of these options will vest on each of the second and third
anniversaries of the date of grant. |
|
(4) |
|
These options vest with respect to 20,834 shares on the
first anniversary of the date of grant, and with respect to
20,833 shares on each of the second and third anniversaries
of the date of grant. |
|
(5) |
|
These options will vest on the second anniversary of the date of
grant. |
|
(6) |
|
50% of these options vest on each of the first and second
anniversaries of the date of grant. |
|
(7) |
|
These options will vest in equal increments on the first, second
and third anniversaries of the date of grant. |
|
(8) |
|
These options will vest with respect to 10,938 shares on
the first anniversary of the date of grant, and with respect to
10,937 shares on the second anniversary of the date of
grant. |
|
(9) |
|
Represents the number of performance shares credited but
unvested as of February 28, 2011. These shares will vest on
February 29, 2012, having a market value as of the vesting
date. |
|
(10) |
|
Represents the number of RSUs granted but not vested as of
February 28, 2011. These RSUs will vest with respect to
Messrs. Zev and Jeffrey Weiss in approximately equal
amounts on May 3 of each of 2011, 2012 and 2013. With respect to
Messrs. Smith, Beeder and Goulder, these RSUs will vest in
equal amounts on May 3 of each of 2011 and 2012. |
|
(11) |
|
Represents the number of unearned performance shares outstanding
as of February 28, 2011 that have neither vested nor been
credited. The number of shares, together with the market value
as of February 28, 2011, shown above, assumes the
satisfaction of the goals at the maximum level over the
performance period. On April 14, 2011, each named executive
officer was credited with the maximum number of shares set forth
above, which represents the maximum number of performance shares
that can be credited with respect to fiscal 2011 performance.
The shares credited remain subject to service-based vesting
conditions. Further detail on the performance share awards is
included in the Compensation Discussion and Analysis section
under Analysis of Compensation Elements Paid to Named
Executive Officers Long-Term Incentive
Compensation Performance Shares. |
Option
Exercises and Stock Vested in Fiscal 2011
The following table provides information for the named executive
officers regarding option exercises and the vesting of stock
during fiscal 2011, together with the associated value realized,
each before payment of any applicable withholding tax.
Fiscal
2011 Option Exercises and Stock Vested Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of
|
|
Value
|
|
Number of
|
|
|
|
|
Shares
|
|
Realized
|
|
Shares
|
|
Value
|
|
|
Acquired
|
|
on
|
|
Acquired
|
|
Realized
|
|
|
on Exercise
|
|
Exercise
|
|
on Vesting
|
|
on Vesting
|
Name
|
|
(#)
|
|
($)
|
|
(#)
|
|
($)
|
|
Zev Weiss
|
|
|
25,500
|
|
|
$
|
432,480
|
(1)
|
|
|
54,208
|
(2)
|
|
$
|
1,213,968
|
|
Stephen J. Smith
|
|
|
11,000
|
|
|
$
|
75,680
|
(1)
|
|
|
9,000
|
(3)
|
|
$
|
194,850
|
|
Jeffrey Weiss
|
|
|
137,000
|
|
|
$
|
1,053,515
|
(1)
|
|
|
42,656
|
(4)
|
|
$
|
953,776
|
|
John W. Beeder
|
|
|
87,500
|
|
|
$
|
751,301
|
(1)
|
|
|
12,000
|
(3)
|
|
$
|
259,800
|
|
Michael L. Goulder
|
|
|
|
|
|
|
|
|
|
|
12,000
|
(3)
|
|
$
|
259,800
|
|
|
|
|
(1) |
|
Represents the difference between the exercise price and the
fair market value of our Class A common shares on the date
of exercise. |
|
(2) |
|
Includes (a) 34,208 Class B performance shares that
were issued on April 15, 2010, based on fiscal 2010
performance, and (b) 20,000 Class B performance shares
that were credited to the named executive officer in April 2010
based on fiscal 2010 performance and that vested on
February 28, 2011. |
|
(3) |
|
Represents Class A performance shares that were credited to
the named executive officer in April 2010 based on fiscal 2010
performance and that vested on February 28, 2011.
Mr. Beeder deferred receipt of 11,786 of his credited
Class A performance shares in accordance with the terms of
the Executive Deferred |
49
|
|
|
|
|
Compensation Plan, the remaining 214 of which were withheld by
the company to satisfy Mr. Beeders tax withholding
obligations. |
|
(4) |
|
Includes (a) 25,656 Class B performance shares that
were issued on April 15, 2010 based on fiscal 2010
performance, and (b) 17,000 Class B performance shares
that were credited to the named executive officer in April 2010
based on fiscal 2010 performance and that vested on
February 28, 2011. |
Pension
Benefits in Fiscal 2011
The table below shows the present value of accumulated benefits
payable to each of the named executive officers, including the
number of years of service credited to each such named executive
officer, under our Supplemental Executive Retirement Plan based
on the assumptions described in footnote one below.
The Supplemental Executive Retirement Plan provides retirement
benefits to officers at the Vice President level and above named
as participants by the Board, which currently includes the named
executive officers and all of our other executive officers. As
of February 28, 2011, there were 29 actively employed
participants in the Supplemental Executive Retirement Plan. The
Supplemental Executive Retirement Plan is designed to provide
benefits that are competitive with those offered by other
comparable companies, while requiring a meaningful tenure as an
officer before a participant is eligible to receive benefits.
Accordingly, to have a vested benefit in the Supplemental
Executive Retirement Plan, a participant must have at least ten
years of service with us, five of which must be as a participant
in the plan.
A Supplemental Executive Retirement Plan participant with a
vested benefit who retires at age 65, which is considered
normal retirement, will receive 1% of final average compensation
for each year of service with us, up to a maximum of 20%.
Therefore, a participant who retires at age 65 with
20 years of service (at least five of which are as a
participant) will receive 20% of final average compensation
annually for life. Participants with a vested benefit who
terminate service with us after attaining age 55 receive
that benefit prior to age 65; however, benefits received
prior to age 65 are reduced by 0.24% for each month prior
to age 65. A participant with a vested benefit will receive
benefits upon attaining age 55 if the participant separates
from American Greetings prior to age 55 but after his or
her 45th birthday, and he or she (1) is unilaterally
terminated by American Greetings; (2) is among a class of
executives who are no longer eligible to participate in the
Supplemental Executive Retirement Plan; (3) is demoted to a
class not eligible to participate in the Supplemental Executive
Retirement Plan; or (4) separates after a change in control
of American Greetings occurs. Final average compensation under
the Supplemental Executive Retirement Plan is defined as the
average of the two highest years of annual compensation during
the participants employment. Annual compensation is
defined as actual annual base salary paid to the participant
(calculated on a calendar year basis rather than on a fiscal
year basis as salary is calculated for purposes of the Summary
Compensation Table) plus the incentive that would have been paid
under any annual incentive plan then in effect if the
participant had been paid exactly 50% of his or her target
incentive compensation. As a result of limiting the incentive
compensation component to 50% of target compensation for
purposes of determining pensionable bonus, the current covered
compensation under the Supplemental Executive Retirement Plan
for purposes of the calculations set forth in the table below
for Messrs. Zev Weiss, Stephen Smith, Jeffrey Weiss, John
Beeder and William Goulder were $1,396,010, $538,611,
$1,056,297, $625,600 and $675,517, respectively. Benefits
are payable in a single life annuity form, provided that
benefits will be payable to the participants beneficiary
in the event of the participants death until a total of
180 monthly payments have been made under the Supplemental
Executive Retirement Plan to or on behalf of such participant.
Benefits are not subject to offset for Social Security or other
payments.
50
Fiscal
2011 Pension Benefits Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Present
|
|
Payments
|
|
|
|
|
Years
|
|
Value of
|
|
During
|
|
|
|
|
Credited
|
|
Accumulated
|
|
Last Fiscal
|
|
|
|
|
Service
|
|
Benefit(1)
|
|
Year
|
Name
|
|
Plan Name
|
|
(#)
|
|
($)
|
|
($)
|
|
Zev Weiss
|
|
Supplemental Executive Retirement Plan
|
|
|
19
|
|
|
$
|
1,096,245
|
|
|
|
|
|
Stephen J. Smith
|
|
Supplemental Executive Retirement Plan
|
|
|
8
|
|
|
$
|
208,378
|
|
|
|
|
|
Jeffrey Weiss
|
|
Supplemental Executive Retirement Plan
|
|
|
23
|
|
|
$
|
1,012,566
|
|
|
|
|
|
John W. Beeder
|
|
Supplemental Executive Retirement Plan
|
|
|
3
|
|
|
$
|
94,121
|
|
|
|
|
|
Michael L. Goulder
|
|
Supplemental Executive Retirement Plan
|
|
|
8
|
|
|
$
|
326,788
|
|
|
|
|
|
|
|
|
(1) |
|
The accumulated benefit is based on service and compensation, as
described above, considered by the plan for the period through
February 28, 2011. The present value has been calculated
assuming the named executive officers will remain in service
until age 65, the age at which retirement may occur without
any reduction in benefits, and that the benefit is payable under
the available forms of annuity consistent with the assumptions
as described in footnote 12 to our audited financial statements
for fiscal 2011 included in our Annual Report on
Form 10-K
filed with the SEC on April 29, 2011. |
Nonqualified
Deferred Compensation for Fiscal 2011
Our executive officers, including the named executive officers,
may participate in our Executive Deferred Compensation Plan and
defer all or a portion of their base salary and any cash
incentive that they receive under the Key Management Annual
Incentive Plan. In addition, the Internal Revenue Service places
a limit on the compensation that can be used for contributions
to a qualified retirement plan such as the 401(k) component of
our Retirement Profit Sharing and Savings Plan. As a result,
executive officers, including the named executive officers, are
permitted to contribute more than the statutory maximum ($16,500
for 2010) under the 401(k) component of our Retirement
Profit Sharing and Savings Plan, and receive a corresponding
match on the additional contributions (40% of the first 6% of
compensation deferred). We refer to these contributions in
excess of the statutory maximum and the associated company match
as the maximizer benefit. Similarly, our executives
at the Vice President level and above, which includes our named
executive officers, receive an additional profit sharing
contribution based on that portion of the executives base
salary that exceeds the statutory compensation limits ($245,000
for 2010), but is below a maximum amount set by us ($356,262 for
2010), which we refer to as the restoration benefit.
The restoration benefit is calculated by determining the amount
of profit sharing contributions made to all employees, expressed
as a percentage of compensation, and multiplying that by the
portion of the executives compensation described in the
prior sentence. Any maximizer benefit or restoration benefit is
credited to the officers account in the Executive Deferred
Compensation Plan. Any such compensation that is deferred into
the Executive Deferred Compensation Plan is credited to the
officers account and invested at the officers
direction in one or more of the following mutual funds: PRIMECAP
Fund Investor Shares, Wellington Fund Investor Shares,
Vanguard 500 Index Investor Shares and Vanguard Prime Money
Market Fund. The named executive officers earnings and
account balance reflected below with respect to such deferred
cash compensation is based on the return on the mutual funds in
which the officer is invested.
Under our 2007 Omnibus Incentive Compensation Plan and our
Executive Deferred Compensation Plan, executives may defer all
or a portion of earned and vested equity awards. Any such equity
awards that are deferred must be held in share equivalents of
American Greetings. Each participant is credited with dividend
equivalents with respect to any dividends paid on American
Greetings common shares during the deferral period. The deferred
shares, together with dividend equivalents, will be paid to the
officer in the form of shares at the end of their deferral
period. The named executive officers earnings and account
balance reflected below with respect to deferred American
Greetings shares are based on the annual return on such shares
and the value of such shares as of February 28, 2011.
51
The payment of a named executive officers benefits under
our Executive Deferred Compensation Plan will begin within
thirty days after the earlier of:
|
|
|
|
|
the expiration of the deferral period provided under the named
executive officers deferral;
|
|
|
|
the date that he incurs an unforeseeable emergency;
|
|
|
|
the date that he terminates service with us for any reason;
|
|
|
|
the date his service is terminated by us for any reason other
than cause; or
|
|
|
|
the date that he incurs a separation from service as defined by
Section 409A of the Internal Revenue Code, which means an
officers termination from employment with us as a result
of the officers death, permanent and total disability,
retirement or other such termination of employment.
|
If the named executive officer is terminated by us for cause, no
benefits will be payable to the named executive officer other
than amounts representing negotiated contributions as determined
under the agreement that is in effect for each plan year and
earnings thereon. If a named executive officer incurs an
unforeseeable emergency, the early withdrawal of benefits is
limited to the amount necessary to meet the emergency. In the
case of any distribution payable as a result of a separation
from service by a named executive officer, the distribution will
begin no earlier than six months from the date of the separation
from service, or if earlier, the date of the named executive
officers death, all in accordance with Section 409A
of the Internal Revenue Code.
Fiscal
2011 Nonqualified Deferred Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate
|
|
|
Executive
|
|
Registrant
|
|
Aggregate
|
|
|
|
Balance
|
|
|
Contributions
|
|
Contributions
|
|
Earnings
|
|
Aggregate
|
|
at Last
|
|
|
in Last Fiscal
|
|
in Last Fiscal
|
|
(Loss) in Last
|
|
Withdrawals/
|
|
Fiscal Year
|
|
|
Year
|
|
Year
|
|
Fiscal Year
|
|
Distributions
|
|
End
|
Name
|
|
($)
|
|
($)(1)
|
|
($)(2)
|
|
($)
|
|
($)(3)
|
|
Zev Weiss
|
|
$
|
95,555
|
(4)
|
|
$
|
42,118
|
|
|
$
|
258,703
|
|
|
$
|
(52,142
|
)
|
|
$
|
2,114,187
|
|
Stephen J. Smith
|
|
$
|
35,180
|
(5)
|
|
$
|
10,693
|
|
|
$
|
19,893
|
|
|
$
|
0
|
|
|
$
|
134,464
|
|
Jeffrey Weiss
|
|
$
|
29,716
|
(4)
|
|
$
|
15,782
|
|
|
$
|
123,250
|
|
|
$
|
0
|
|
|
$
|
868,975
|
|
John W. Beeder
|
|
$
|
276,391
|
(6)
|
|
$
|
12,385
|
|
|
$
|
5,073
|
|
|
$
|
0
|
|
|
$
|
322,723
|
|
Michael L. Goulder
|
|
$
|
19,689
|
(4)
|
|
$
|
11,771
|
|
|
$
|
20,298
|
|
|
$
|
0
|
|
|
$
|
172,572
|
|
|
|
|
(1) |
|
Reflects the maximizer and restoration benefits contributions
made by us and credited to the accounts of the named executive
officers based on fiscal 2011 performance. These amounts are
included in the All Other Compensation column of the
Fiscal 2011 Summary Compensation Table. Does not include the
maximizer and restoration benefits contributed in fiscal 2011
based on fiscal 2010 performance. |
|
(2) |
|
Reflects earnings or losses on each type of deferred
compensation listed above. The earnings are calculated based on
(a) the total number of units credited to the account
multiplied by the price of American Greetings common shares or
the applicable mutual fund as of February 28, 2011, less
(b) the total number of units credited to the account
multiplied by the price of American Greetings common shares or
the applicable mutual fund as of February 28, 2010. No
portion of these earnings was included in the Fiscal 2011
Summary Compensation Table because there were no
above-market or preferential earnings as defined in
applicable rules of the SEC. |
|
(3) |
|
The aggregate balances reported in this column (without taking
into account earnings or losses on, or distributions from,
account balances) include the following amounts previously
reported in prior Summary Compensation Tables: for Mr. Zev
Weiss, $2,654,384; for Mr. Smith, $66,380; for
Mr. Jeffrey Weiss, $1,980,142; for Mr. Beeder, $28,865
and Mr. Goulder, $57,046. |
|
(4) |
|
Represents employee contributions under the maximizer benefit,
which is included in the Salary column of the Fiscal
2011 Summary Compensation Table. |
52
|
|
|
(5) |
|
Of the amount reported, $18,186 represents salary deferrals and
the remainder represents employee contributions under the
maximizer benefit, all of which are included in the
Salary column of the Fiscal 2011 Summary
Compensation Table. |
|
(6) |
|
Of the amount reported, $255,167 represents Class A
performance shares deferred by Mr. Beeder (included in the
Stock Awards column of the Fiscal 2011 Summary
Compensation Table for fiscal 2010) and the remainder
represents employee contributions under the maximizer benefit
that are included in the Salary column of the Fiscal
2011 Summary Compensation Table. |
Potential
Payments Upon Termination or Change in Control
We do not offer separate change in control agreements for our
officers. However, we provide for the payment of severance and
certain other benefits to our named executive officers upon
certain types of terminations of employment, as described below.
These benefits are in addition to benefits generally available
to all salaried employees. In all cases, the timing and amount
of payments will comply with the requirements of
Section 409A of the Internal Revenue Code, including, in
the case of an officer who is a Specified Employee as defined
under Section 409A (which generally includes our fifty
highest paid officers), the delay of payments until six months
following the date of separation.
Employment Agreements. Pursuant to
their employment agreements, dated May 1, 1997 and
June 1, 1991, respectively, if each of Messrs. Zev or
Jeffrey Weiss, as applicable, is terminated by us for any reason
other than a gross violation of his obligations to us, we must
pay him a continuing salary at a rate of the highest base salary
paid to him during the preceding six months for a period
equivalent to one-half month for each year of his employment
with us, but in no event will such payment be less than three
months or greater than twelve months. The agreements each
contain a customary confidentiality provision and prohibit
Messrs. Zev or Jeffrey Weiss, as applicable, from working
for any of our competitors in the United States or Canada for a
period of twelve months following their employment with us. In
addition, if Messrs. Zev or Jeffrey Weiss, as applicable,
sign a waiver and release agreement at the time of his
termination of employment, he will receive the greater of the
benefits provided in his employment agreement or the benefits
provided under our American Greetings Severance Benefits Plan
(Officers), which is described in greater detail below under
Severance Benefits Plan.
Pursuant to his employment agreement, dated April 14, 2003,
if Mr. Smith is terminated by us for any reason other than
a gross violation of his obligations to us, we are required to
pay him the highest base salary paid to him during the preceding
six months for a period of 12 months. The agreement
contains a customary confidentiality provision and prohibits
Mr. Smith from working for any of our competitors in the
United States or Canada for a period of twelve months following
his employment with us. In addition, if Mr. Smith signs a
waiver and release agreement at the time of his termination of
employment, he will receive the greater of the benefits provided
in his employment agreement or the benefits provided under our
American Greetings Severance Benefits Plan (Officers) described
below.
Mr. Beeder has an employment agreement with us dated
June 12, 2008, which provides that if he is involuntarily
terminated without cause (as defined in his employment
agreement) or if Mr. Beeder terminates his employment
because we have materially reduced his title, authority, duties
and responsibilities (other than as a result of a change in
control, as defined in his employment agreement), and, in each
case, he executes a waiver and release for any claims against
the company, he will be entitled to 12 months base salary
at the salary in effect at the time of separation (reduced by
the amount of salary Mr. Beeder may receive from subsequent
employment during that period), which will not be less than
$440,000, participation in our health care and life insurance
programs for twelve months following termination (at premiums
and rates otherwise available to active employees), and
outplacement services. If Mr. Beeder is involuntarily
terminated without cause but he does not execute a waiver and
release for any claims against the company, then Mr. Beeder
will only be entitled to three months base salary at the salary
in effect at the time of separation. Mr. Beeders
employment agreement also provides that if his employment
agreement is terminated by us as a result of a change in control
or by Mr. Beeder because we have materially reduced his
title, authority or responsibilities as a result of a change in
control, he will be entitled to twelve months base salary at the
salary in effect at the time of separation, which will not be
less than $440,000; provided such amount will be reduced by the
amount
53
of salary Mr. Beeder may receive from subsequent employment
during that period. Mr. Beeders agreement contains a
customary confidentiality provision and prohibits
Mr. Beeder from working for any of our competitors in the
United States or Canada for a period of 12 months following
his employment with us.
Mr. Goulder has an agreement with us dated October 17,
2002 that provides that if (1) he is involuntarily
terminated for reasons other than a gross violation of his
obligations to us; (2) his duties are reduced to a position
below that of a Senior Vice President; or (3) there is a
change of control in our ownership, he will be entitled to:
|
|
|
|
|
twelve months base salary at the salary in effect at the time of
separation, which will not be less than $330,000;
|
|
|
|
if he has completed six months of active employment in the
fiscal year of separation, continued participation in our Key
Management Annual Incentive Plan for that fiscal year, which
will be the job level at the time of separation, with the payout
based on the actual payout percentage earned and base salary
earnings for the fiscal year up to the separation date;
|
|
|
|
continued vesting of any stock options that would otherwise vest
during the twelve months following termination and the ability
to exercise any vested options for up to 90 days following
the end of the twelve months following termination;
|
|
|
|
participation in our health care and life insurance programs for
twelve months following termination (at premiums and rates
otherwise available to active employees); and
|
|
|
|
continued use of a company car for 90 days after his
termination (all other executive officers receive continued use
of a company car for 30 days following termination by us
without cause).
|
Severance Benefits Plan. The American
Greetings Severance Benefits Plan (Officers) provides severance
benefits to our U.S. executive officers who lose their
positions involuntarily other than as a result of a gross
violation of their obligations to us. Upon a change in control
there is no payment to an officer unless there is a subsequent
termination due to the fact that the officer is not offered a
comparable position. If an officer does not sign a waiver and
release agreement at the time of termination, the officer will
receive one-half of one months base salary (exclusive of
bonus, commission or other incentives). If an officer signs a
waiver and release agreement at the time of termination, the
officer will receive (1) one months base salary
(exclusive of bonus, commission or other incentives) for each
year of continuous service completed with us, with a minimum
total benefit of at least twelve months and a maximum total
benefit of twenty-four months and (2) outplacement services
for six months to assist the officer in seeking employment. In
addition, each officer will receive continued health care
coverage concurrently with COBRA in the plan in which the
officer was enrolled at the time of termination at the employee
payroll deduction rate through the end of the applicable
severance period, and we will deduct the monthly premium from
the severance payment. We will make the severance payments on a
monthly basis or in a lump sum, at our discretion.
Mr. Beeder and Mr. Goulder do not participate in the
American Greetings Severance Benefits Plan (Officers) and
receive severance according to the terms of their respective
agreements described above.
Supplemental Executive Retirement
Plan. The named executive officers
participate in our Supplemental Executive Retirement Plan, which
is described above under Pension Benefits in Fiscal
2011. Please see the narrative and the table in that
section for information regarding the circumstances in our
Supplemental Executive Retirement Plan that will trigger
payments or the provision of benefits and the calculation of
those benefits. In addition to those circumstances, if a named
executive officer becomes disabled and is eligible for and
receiving benefits under our Long-Term Disability Plan, the
named executive officer may begin receiving a disability
retirement benefit under the Supplemental Executive Retirement
Plan on the later of the first day of the month coinciding with
or next following: (1) the date the named executive officer
stops receiving benefit payments under the Long-Term Disability
Plan; and (2) the date the named executive officer reaches
age 65. The benefit payable to a named executive officer
will be his accrued benefit determined as of the date he began
receiving benefits under the Long-Term Disability Plan. If the
named executive officer is not eligible to receive benefits
under our Long-Term Disability Plan, his accrued benefit will be
determined as of the date he is determined to have a disability
under Section 409A of the Internal Revenue Code.
54
Limitations on Benefits. During a named
executive officers participation in the Supplemental
Executive Retirement Plan and for a period of two years
following the date he separates from employment with us, each
named executive officer must comply with certain obligations,
including confidentiality, non-solicitation and
non-disparagement obligations, obligations to disclose business
opportunities to us, and obligations to refrain from engaging in
criminal conduct. If a named executive officer violates one or
more of the foregoing obligations, he will immediately forfeit
any and all rights to benefits under the plan. In addition, for
a period of ten years following the date a named executive
officer separates from employment with us, he must
(1) refrain from engaging in certain competitive
activities, (2) provide consulting services to us upon our
request, and (3) not commence or threaten to commence an
action seeking recovery of a benefit under the plan that has
been completely or partially denied or to enforce the terms of
the plan without first signing a confidentiality agreement
regarding the claim. If the named executive officer violates one
or more of the foregoing items, we will not be required to pay
any benefits to him. Under the plan, each named executive
officer must assign and transfer to us any and all discoveries,
inventions and improvements that he has conceived, or may make,
conceive, acquire or suggest, whether solely or jointly with
others during his employment by us, and which relate to any
subject matter within the field in which he provides personal
services to us and involves the use of resources belonging to us.
Committee Discretion to Impose Lesser
Sanctions. If the Compensation and Management
Development Committee determines that the financial impact on us
from a violation of any of the requirements set forth in the
Limitations on Benefits described above is expected
to be less than $250,000 in the aggregate, in lieu of the
complete forfeiture of the named executive officers
benefit the Compensation Committee may impose a limited monetary
sanction equal to the lesser of (1) one-half of the present
value of his benefit under the plan (determined as of the date
of the violation) or (2) $100,000, as a set off against the
plan benefit otherwise payable.
Executive Deferred Compensation
Plan. The named executive officers
participate in our Executive Deferred Compensation Plan
described above under Nonqualified Deferred Compensation
for Fiscal 2011. Please see the narrative and the table in
that section for information regarding the circumstances in our
Executive Deferred Compensation Plan that will trigger payments
or the provision of benefits and the calculation of those
benefits.
Key Management Annual Incentive
Plan. The named executive officers
participate in our Key Management Annual Incentive Plan. Please
see the Analysis of Compensation Elements Paid to Named
Executive Officers Key Management Annual Incentive
Plan section in the Compensation Discussion and Analysis
section for a more detailed description of our Key Management
Annual Incentive Plan. If a named executive officer voluntarily
or involuntarily separates employment before the completion of a
plan year, which coincides with our fiscal year, the officer
will forfeit his award for that fiscal year. If a named
executive officers employment with us ends during a plan
year because the named executive officer (1) elects to
retire after age 60, (2) takes a leave of absence, or
(3) suffers a permanent disability or dies, the incentive
payout will be prorated to the nearest full month based on the
actual period the officer participated in the plan during the
fiscal year.
Equity Incentive Plans. Each of our
named executive officers has one or more grants of options
outstanding under our American Greetings Corporation 1997 Equity
and Performance Incentive Plan, our 2007 Omnibus Incentive
Compensation Plan, or both. According to the terms of their
stock option agreements, all options become immediately
exercisable in full if the named executive officer dies, becomes
permanently disabled or incompetent, or has ten or more years of
continuous service with us and terminates employment at
age 65. In addition, options granted to our named executive
officers terminate on the earliest of the following dates:
(1) ten years from the date of grant; (2) nine months
from the date of permanent disability of the named executive
officer if the same was the cause of, or occurred within three
months after, termination of the named executive officers
employment with us; (3) immediately, on the date the
grantees employment is terminated for cause (in the case
of grants under the 2007 Omnibus Compensation Plan), or on the
date of an act by the officer that is intentionally committed
and materially inimical to our interests (in the case of grants
under the 1997 Equity and Performance Incentive Plan); or
(4) three months from the date of termination of employment
in all other cases.
55
Each of our named executive officers has one or more grants of
RSUs outstanding under our 2007 Omnibus Incentive Compensation
Plan. Except as described below, RSUs not vested on the date the
named executive officer separates from American Greetings will
be forfeited. If the named executive officers employment
ends because he elects to retire at age 65 with ten years
of continuous service, suffers a permanent disability, or dies,
RSUs that have not vested as of the date of separation will
immediately vest on the date of separation on a pro-rata basis.
The pro-rata percentage of shares that vest will be determined
based on the period of time between the date the RSUs were
granted and the separation date, as a percentage of the full
vesting period. If the named executive officer is terminated for
cause, any RSUs not yet vested or vested but not issued, will
also be forfeited.
Each of our named executive officers has a grant of performance
shares outstanding under our 2007 Omnibus Incentive Compensation
Plan. Except as described below, shares not vested on the date
the named executive officer separates from American Greetings
will be forfeited. If the named executive officers
employment ends because he elects to retire at age 65 with
ten years of continuous service, suffers a permanent disability,
dies, or is involuntary separated without cause, shares that
have not yet been credited as of the date of separation are
forfeited. Under those same circumstances, shares that are
credited but not yet vested will immediately vest on the date of
separation on a pro-rata basis. The pro-rata percentage of
shares that vest will be determined based on the period of time
between the date the shares were credited and the separation
date, as a percentage of the full vesting period. If the named
executive officer is terminated for cause, any performance
shares credited but not yet vested or vested but not issued,
will also be forfeited.
Life Insurance Benefits. For a
description of the executive life insurance that provides
coverage to the named executive officers, see footnote 6(d) to
the above Fiscal 2011 Summary Compensation Table. We provide
this coverage, together with any associated tax reimbursement,
for six months following the termination of an executive officer
by us without cause. We provide each named executive officer to
receive accidental death and dismemberment proceeds in an amount
equal to $275,000. Additionally, we provide Business Travel
Accident Insurance in an amount equal to the lesser of
(1) three times his annual salary or
(2) $3 million, subject to a minimum of $250,000 for
each named executive officer.
Quantitative Disclosure. The tables
below reflect the amount of compensation that would be paid to
each of the named executive officers in the event of termination
of such executives employment, disability or following a
change in control. The amounts shown assume that such
termination was effective as of February 28, 2011, and thus
include amounts earned through such date. The actual amounts to
be paid out can only be determined at the time of such
executives actual separation. As necessary for purposes of
calculations, we have used the closing price of our Class A
common shares on the NYSE on February 28, 2011, the last
trading day of our fiscal year, which was $21.65. The amounts
shown do not include benefits and payments that are generally
available to all employees on a non-discriminatory basis.
Zev Weiss
(Chief Executive Officer)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Resignation
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
without
|
|
|
Resignation
|
|
|
Termination by
|
|
|
Termination
|
|
|
Following
|
|
|
Change in
|
|
|
|
|
|
|
|
|
Early
|
|
|
|
Good
|
|
|
with Good
|
|
|
us without
|
|
|
by us for
|
|
|
Change in
|
|
|
Control
|
|
|
|
|
|
|
|
|
Retirement
|
|
Benefits and Payments
|
|
Reason
|
|
|
Reason
|
|
|
Cause
|
|
|
Cause
|
|
|
Control
|
|
|
(no Termination)
|
|
|
Death
|
|
|
Disability
|
|
|
(Rule of 65)
|
|
|
Base Salary
|
|
|
|
|
|
|
|
|
|
$
|
1,344,562
|
(1)
|
|
|
|
|
|
$
|
1,344,562
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Management Annual
Incentive Plan(2)
|
|
$
|
1,716,715
|
|
|
$
|
1,716,715
|
|
|
$
|
1,716,715
|
|
|
$
|
716,683
|
|
|
$
|
1,716,715
|
|
|
|
|
|
|
$
|
1,716,715
|
|
|
$
|
1,716,715
|
|
|
$
|
1,716,715
|
|
Stock Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,036,385
|
|
|
$
|
1,036,385
|
|
|
|
|
|
Performance Shares
|
|
|
|
|
|
|
|
|
|
$
|
216,500
|
|
|
|
|
|
|
$
|
216,500
|
|
|
|
|
|
|
$
|
216,500
|
|
|
$
|
216,500
|
|
|
|
|
|
RSUs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
93,961
|
|
|
$
|
93,961
|
|
|
|
|
|
Supplemental Executive Retirement Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,096,245
|
(3)
|
|
|
|
|
Deferred Compensation
|
|
$
|
2,114,187
|
|
|
$
|
2,114,187
|
|
|
$
|
2,114,187
|
|
|
$
|
2,016,479
|
|
|
$
|
2,114,187
|
|
|
|
|
|
|
$
|
2,114,187
|
|
|
$
|
2,114,187
|
|
|
$
|
2,114,187
|
|
Health Care
|
|
|
|
|
|
|
|
|
|
$
|
14,976
|
|
|
|
|
|
|
$
|
14,976
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Insurance
Proceeds(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
7,944,618
|
|
|
|
|
|
|
|
|
|
Outplacement
Services(5)
|
|
|
|
|
|
|
|
|
|
$
|
15,000
|
|
|
|
|
|
|
$
|
15,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Insurance
Premiums(6)
|
|
|
|
|
|
|
|
|
|
$
|
16,470
|
|
|
|
|
|
|
$
|
16,470
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company Car
|
|
|
|
|
|
|
|
|
|
$
|
1,658
|
|
|
|
|
|
|
$
|
1,658
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
3,830,902
|
|
|
$
|
3,830,902
|
|
|
$
|
5,440,069
|
|
|
$
|
2,733,162
|
|
|
$
|
5,440,069
|
|
|
$
|
0
|
|
|
$
|
13,122,366
|
|
|
$
|
6,273,993
|
|
|
$
|
3,830,902
|
|
56
Stephen
J. Smith (Senior Vice President and Chief Financial
Officer)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Resignation
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
without
|
|
|
Resignation
|
|
|
Termination by
|
|
|
Termination
|
|
|
Following
|
|
|
Change in
|
|
|
|
|
|
|
|
|
Early
|
|
|
|
Good
|
|
|
with Good
|
|
|
us without
|
|
|
by us for
|
|
|
Change in
|
|
|
Control
|
|
|
|
|
|
|
|
|
Retirement
|
|
Benefits and Payments
|
|
Reason
|
|
|
Reason
|
|
|
Cause
|
|
|
Cause
|
|
|
Control
|
|
|
(no Termination)
|
|
|
Death
|
|
|
Disability
|
|
|
(Rule of 65)
|
|
|
Base Salary
|
|
|
|
|
|
|
|
|
|
$
|
424,711
|
|
|
|
|
|
|
$
|
424,711
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Management Annual
Incentive Plan(2)
|
|
$
|
502,902
|
|
|
$
|
502,902
|
|
|
$
|
502,902
|
|
|
$
|
222,172
|
|
|
$
|
502,902
|
|
|
|
|
|
|
$
|
502,902
|
|
|
$
|
502,902
|
|
|
$
|
502,902
|
|
Stock Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
176,088
|
|
|
$
|
176,088
|
|
|
|
|
|
Performance Shares
|
|
|
|
|
|
|
|
|
|
$
|
97,425
|
|
|
|
|
|
|
$
|
97,425
|
|
|
|
|
|
|
$
|
97,425
|
|
|
$
|
97,425
|
|
|
|
|
|
RSUs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
29,054
|
|
|
$
|
29,054
|
|
|
|
|
|
Supplemental Executive Retirement Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
208,378
|
(3)
|
|
|
|
|
Deferred Compensation
|
|
$
|
134,464
|
|
|
$
|
134,464
|
|
|
$
|
134,464
|
|
|
$
|
97,429
|
|
|
$
|
134,464
|
|
|
|
|
|
|
$
|
134,464
|
|
|
$
|
134,464
|
|
|
$
|
134,464
|
|
Health Care
|
|
|
|
|
|
|
|
|
|
$
|
9,984
|
|
|
|
|
|
|
$
|
9,984
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Insurance
Proceeds(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,823,266
|
|
|
|
|
|
|
|
|
|
Outplacement
Services(5)
|
|
|
|
|
|
|
|
|
|
$
|
15,000
|
|
|
|
|
|
|
$
|
15,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Insurance
Premiums(6)
|
|
|
|
|
|
|
|
|
|
$
|
12,433
|
|
|
|
|
|
|
$
|
12,433
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company Car
|
|
|
|
|
|
|
|
|
|
$
|
1,178
|
|
|
|
|
|
|
$
|
1,178
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
637,366
|
|
|
$
|
637,366
|
|
|
$
|
1,198,097
|
|
|
$
|
319,601
|
|
|
$
|
1,198,097
|
|
|
$
|
0
|
|
|
$
|
4,763,199
|
|
|
$
|
1,148,311
|
|
|
$
|
637,366
|
|
Jeffrey
Weiss (President and Chief Operating Officer)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Resignation
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
without
|
|
|
Resignation
|
|
|
Termination by
|
|
|
Termination
|
|
|
Following
|
|
|
Change in
|
|
|
|
|
|
|
|
|
Early
|
|
|
|
Good
|
|
|
with Good
|
|
|
us without
|
|
|
by us for
|
|
|
Change in
|
|
|
Control
|
|
|
|
|
|
|
|
|
Retirement
|
|
Benefits and Payments
|
|
Reason
|
|
|
Reason
|
|
|
Cause
|
|
|
Cause
|
|
|
Control
|
|
|
(no Termination)
|
|
|
Death
|
|
|
Disability
|
|
|
(Rule of 65)
|
|
|
Base Salary
|
|
|
|
|
|
|
|
|
|
$
|
1,300,086
|
(1)
|
|
|
|
|
|
$
|
1,300,086
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Management Annual
Incentive Plan(2)
|
|
$
|
1,209,376
|
|
|
$
|
1,209,376
|
|
|
$
|
1,209,376
|
|
|
$
|
504,883
|
|
|
$
|
1,209,376
|
|
|
|
|
|
|
$
|
1,209,376
|
|
|
$
|
1,209,376
|
|
|
$
|
1,209,376
|
|
Stock Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
777,290
|
|
|
$
|
777,290
|
|
|
|
|
|
Performance Shares
|
|
|
|
|
|
|
|
|
|
$
|
184,025
|
|
|
|
|
|
|
$
|
184,025
|
|
|
|
|
|
|
$
|
184,025
|
|
|
$
|
184,025
|
|
|
|
|
|
RSUs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
70,666
|
|
|
$
|
70,666
|
|
|
|
|
|
Supplemental Executive Retirement Plan
|
|
|
|
|
|
|
|
|
|
$
|
1,012,566
|
(3)
|
|
|
|
(7)
|
|
$
|
1,012,566
|
(3)
|
|
|
|
|
|
|
|
|
|
$
|
1,012,566
|
(3)
|
|
|
|
|
Deferred Compensation
|
|
$
|
868,975
|
|
|
$
|
868,975
|
|
|
$
|
868,975
|
|
|
$
|
765,159
|
|
|
$
|
868,975
|
|
|
|
|
|
|
$
|
868,975
|
|
|
$
|
868,975
|
|
|
$
|
868,975
|
|
Health Care
|
|
|
|
|
|
|
|
|
|
$
|
13,041
|
|
|
|
|
|
|
$
|
13,041
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Insurance
Proceeds(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,757,436
|
|
|
|
|
|
|
|
|
|
Outplacement
Services(5)
|
|
|
|
|
|
|
|
|
|
$
|
15,000
|
|
|
|
|
|
|
$
|
15,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Insurance
Premiums(6)
|
|
|
|
|
|
|
|
|
|
$
|
14,426
|
|
|
|
|
|
|
$
|
14,426
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company Car
|
|
|
|
|
|
|
|
|
|
$
|
956
|
|
|
|
|
|
|
$
|
956
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,078,351
|
|
|
$
|
2,078,351
|
|
|
$
|
4,618,450
|
|
|
$
|
1,270,042
|
|
|
$
|
4,618,450
|
|
|
$
|
0
|
|
|
$
|
7,867,767
|
|
|
$
|
4,122,897
|
|
|
$
|
2,078,351
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John W.
Beeder (Senior Vice President Executive Sales and
Marketing Officer)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Resignation
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
without
|
|
|
Resignation
|
|
|
Termination by
|
|
|
Termination
|
|
|
Following
|
|
|
Change in
|
|
|
|
|
|
|
|
|
Early
|
|
|
|
Good
|
|
|
with Good
|
|
|
us without
|
|
|
by us for
|
|
|
Change in
|
|
|
Control
|
|
|
|
|
|
|
|
|
Retirement
|
|
Benefits and Payments
|
|
Reason
|
|
|
Reason
|
|
|
Cause
|
|
|
Cause
|
|
|
Control
|
|
|
(no Termination)
|
|
|
Death
|
|
|
Disability
|
|
|
(Rule of 65)
|
|
|
Base Salary
|
|
|
|
|
|
$
|
492,000
|
(8)
|
|
$
|
492,000
|
(8)
|
|
|
|
|
|
$
|
492,000
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Management Annual
Incentive Plan(2)
|
|
$
|
741,473
|
|
|
$
|
741,473
|
|
|
$
|
741,473
|
|
|
$
|
293,403
|
|
|
$
|
741,473
|
|
|
|
|
|
|
$
|
741,473
|
|
|
$
|
741,473
|
|
|
$
|
741,473
|
|
Stock Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
243,600
|
|
|
$
|
243,600
|
|
|
|
|
|
Performance Shares
|
|
|
|
|
|
|
|
|
|
$
|
129,900
|
|
|
|
|
|
|
$
|
129,900
|
|
|
|
|
|
|
$
|
129,900
|
|
|
$
|
129,900
|
|
|
|
|
|
RSUs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
49,622
|
|
|
$
|
49,622
|
|
|
|
|
|
Supplemental Executive Retirement Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
94,121
|
(3)
|
|
|
|
|
Deferred Compensation
|
|
$
|
322,723
|
|
|
$
|
322,723
|
|
|
$
|
322,723
|
|
|
$
|
298,643
|
|
|
$
|
322,723
|
|
|
|
|
|
|
$
|
322,723
|
|
|
$
|
322,723
|
|
|
$
|
322,723
|
|
Health Care
|
|
|
|
|
|
|
|
|
|
$
|
10,092
|
(8)
|
|
|
|
|
|
$
|
10,092
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Insurance
Proceeds(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,252,000
|
|
|
|
|
|
|
|
|
|
Outplacement Services
|
|
|
|
|
|
|
|
|
|
$
|
15,000
|
(8)
|
|
|
|
|
|
$
|
15,000
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Insurance
Premiums(6)
|
|
|
|
|
|
|
|
|
|
$
|
10,816
|
(8)
|
|
|
|
|
|
$
|
10,816
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company Car
|
|
|
|
|
|
|
|
|
|
$
|
938
|
|
|
|
|
|
|
$
|
938
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,064,196
|
|
|
$
|
1,556,196
|
|
|
|
1,722,943
|
|
|
$
|
592,046
|
|
|
$
|
1,722,943
|
|
|
$
|
0
|
|
|
$
|
4,739,318
|
|
|
$
|
1,581,439
|
|
|
$
|
1,064,196
|
|
57
Michael
L. Goulder (Senior Vice President Executive Supply Chain
Officer)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Resignation
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
without
|
|
|
Resignation
|
|
|
Termination by
|
|
|
Termination
|
|
|
Following
|
|
|
Change in
|
|
|
|
|
|
|
|
|
Early
|
|
|
|
Good
|
|
|
with Good
|
|
|
us without
|
|
|
by us for
|
|
|
Change in
|
|
|
Control
|
|
|
|
|
|
|
|
|
Retirement
|
|
Benefits and Payments
|
|
Reason
|
|
|
Reason
|
|
|
Cause
|
|
|
Cause
|
|
|
Control
|
|
|
(no Termination)
|
|
|
Death
|
|
|
Disability
|
|
|
(Rule of 65)
|
|
|
Base Salary
|
|
|
|
|
|
$
|
492,067
|
|
|
$
|
492,067
|
|
|
|
|
|
|
$
|
492,067
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Management Annual Incentive
Plan(2)
|
|
$
|
672,857
|
|
|
$
|
672,857
|
|
|
$
|
672,857
|
|
|
$
|
297,254
|
|
|
$
|
672,857
|
|
|
|
|
|
|
$
|
672,857
|
|
|
$
|
672,857
|
|
|
$
|
672,857
|
|
Stock Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
243,600
|
|
|
$
|
243,600
|
|
|
|
|
|
Performance Shares
|
|
|
|
|
|
|
|
|
|
$
|
129,900
|
|
|
|
|
|
|
$
|
129,900
|
|
|
|
|
|
|
$
|
129,900
|
|
|
$
|
129,900
|
|
|
|
|
|
RSUs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
39,684
|
|
|
$
|
39,684
|
|
|
|
|
|
Supplemental Executive Retirement Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
326,788
|
(3)
|
|
|
|
|
Deferred Compensation
|
|
$
|
172,572
|
|
|
$
|
172,572
|
|
|
$
|
172,572
|
|
|
$
|
124,081
|
|
|
$
|
172,572
|
|
|
|
|
|
|
$
|
172,572
|
|
|
$
|
172,572
|
|
|
$
|
172,572
|
|
Health Care
|
|
|
|
|
|
|
|
|
|
$
|
7,452
|
|
|
|
|
|
|
$
|
7,452
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Insurance
Proceeds(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,252,402
|
|
|
|
|
|
|
|
|
|
Outplacement
Services(5)
|
|
|
|
|
|
|
|
|
|
$
|
15,000
|
|
|
|
|
|
|
$
|
15,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Insurance
Premiums(6)
|
|
|
|
|
|
|
|
|
|
$
|
12,615
|
|
|
|
|
|
|
$
|
12,615
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company Car
|
|
|
|
|
|
$
|
2,609
|
|
|
$
|
2,609
|
|
|
|
|
|
|
$
|
2,609
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
845,429
|
|
|
$
|
1,340,105
|
|
|
$
|
1,505,072
|
|
|
$
|
421,335
|
|
|
$
|
1,505,072
|
|
|
$
|
0
|
|
|
$
|
4,511,015
|
|
|
$
|
1,585,401
|
|
|
$
|
845,429
|
|
|
|
|
(1) |
|
Assumes that the named executive officer signed the requisite
waiver and release agreement contemplated by the American
Greetings Severance Benefit Plan (Officers) as described above,
entitling him to 18 months of severance in the case of
Mr. Zev Weiss and 22 months of severance in the case
of Mr. Jeffrey Weiss. If the officer does not sign such
waiver and release agreement, he would have been entitled to
receive nine months of severance in the case of Mr. Zev
Weiss and 11 months of severance in the case of
Mr. Jeffrey Weiss, in accordance with their employment
agreements. |
|
(2) |
|
If a named executive officer voluntarily or involuntarily
separates from employment before the completion of a plan year,
which coincides with our fiscal year, the officer will forfeit
his award for that fiscal year. For purposes of this table, we
have assumed the officer terminates employment as of the close
of business on February 28, 2011, and was thus actively
employed as of the last day of the fiscal year and plan year.
For purposes of this table, we have also assumed the named
executive officer was paid under the individual component of the
Key Management Annual Incentive Plan based on the actual
achievement of his individual performance goals for fiscal 2011
for all separation events other than termination by us for
cause, which assumed the named executive officer received the
lowest individual performance rating. |
|
(3) |
|
Represents the present value of the accrued benefit. |
|
(4) |
|
Assumes that the officers death occurred as the result of
an accident covered under our accidental death and dismemberment
insurance policy and our business travel accident insurance
policy. The amounts represent the proceeds to be paid by the
applicable insurance company to which we have made premium
payments. |
|
(5) |
|
Assumes that the named executive officer signs the requisite
waiver and release agreement contemplated by the American
Greetings Severance Benefit Plan (Officers) as described above,
entitling him to six months of outplacement services, the value
of which we estimate to be equal to $15,000 as of
February 28, 2011. If the officer does not sign such waiver
and release agreement, he will not be entitled to any
outplacement services. |
|
(6) |
|
Includes amounts reimbursed for the payment of taxes on income
attributed to the officer for the value of universal life
insurance premiums paid by American Greetings. |
|
(7) |
|
Assumes that the named executive officer is terminated for
violating his obligations as set forth in the Supplemental
Executive Retirement Plan. |
|
(8) |
|
Assumes that the named executive officer signs the requisite
waiver and release agreement pursuant to his employment
agreement. If he does not sign the waiver and release agreement,
the amounts he will receive in these categories will be reduced
or eliminated. |
58
DIRECTOR
COMPENSATION
We use a combination of cash and equity-based incentive
compensation to attract and retain qualified candidates to serve
on our Board. The compensation we pay our non-employee directors
is designed to fairly pay directors for work required for a
company of our size and scope, to align directors
interests with the long-term interests of shareholders, and to
attract and retain qualified individuals to serve on our Board.
In setting director compensation, we consider the significant
amount of time that directors spend in fulfilling their duties
to American Greetings, the skill level we require of members of
the Board, and the compensation paid to directors of companies
of our size and structure. Employees of American Greetings who
are also directors are not compensated for serving on the Board.
Cash
Compensation Paid to Board Members
During fiscal 2011, each non-employee director was entitled to
receive the following cash compensation with respect to his or
her service on the Board:
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$70,000 annual board retainer fee;
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$10,000 annual retainer fee to the chair of the Nominating and
Governance Committee; $15,000 annual retainer fee to the chair
of the Compensation and Management Development Committee; and
$20,000 annual retainer fee to the chair of the Audit Committee;
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$7,500 annual retainer fee to non-chair members of the
Nominating and Governance Committee and the Compensation and
Management Development Committee and $10,000 annual retainer fee
to non-chair members of the Audit Committee; and
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Reimbursement of expenses related to attending Board and
committee meetings.
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From time to time, the Board may establish additional committees
or subcommittees relating to specific matters. Although these
committees are not standing committees and are formed on a
temporary basis, directors serving on these committees are
typically paid an additional retainer
and/or a fee
for meetings that they attend. Directors may make an election to
receive American Greetings Class A or Class B
common shares in lieu of all or a portion of the fees due to
such directors as compensation for serving on the Board. All of
such shares are fully vested. For purposes of determining the
number of shares to be issued in lieu of such fees, the shares
are valued based on the closing price of the American
Greetings Class A common shares on the last trading
day of the calendar quarter prior to the payment of such fees.
Stock
Option Program
In addition to cash compensation, to further align non-employee
directors interests with the interests of our
shareholders, each year non-employee directors receive an annual
grant of options to purchase our Class A common shares. In
accordance with our stock option grant policy, the annual grant
of options to purchase 15,000 Class A common shares to our
non-employee directors is made at the same time as the annual
grant is made to our officers, on the second trading day
following the filing of our Annual Report on
Form 10-K.
Half of these options are exercisable on the first anniversary
of the date of grant and half on the second anniversary of the
date of grant. The exercise price of the annual grant of options
was $24.69 per share, representing the closing price of our
Class A common shares on May 3, 2010, the date of
grant. Consistent with the decision to grant employees RSUs in
lieu of a portion of the annual stock option grant, effective
with the annual grant in May 2011, in lieu of the annual stock
option grant to non-employee directors, non-employee directors
are granted 3,800 Class A RSUs that vest in one-half
increments on each of the first two anniversaries of the date of
grant.
Deferred
Compensation Program for Non-Employee Directors
The American Greetings Outside Directors Deferred
Compensation Plan allows for each non-employee director to defer
all or part of his or her compensation. Any cash compensation
that is deferred is credited to the directors account and
invested according to the directors instruction in the
following mutual funds:
59
PRIMECAP Fund Investor Shares, Wellington
Fund Investor Shares, Vanguard 500 Index Investor Shares
and Vanguard Prime Money Market Fund. If a director elects to
defer his or her retainer or committee fees that are received in
the form of shares, such deferred compensation is held in share
equivalents of American Greetings. Each participant is credited
with dividend equivalents with respect to any dividends paid on
American Greetings common shares during the deferral period. The
deferred shares, together with dividend equivalents, will be
paid to the director in the form of shares at the end of their
deferral period. No portion of a directors earnings under
the Outside Directors Deferred Compensation Plan are
above-market or preferential, as defined in
applicable rules of the SEC.
Director
Compensation Table
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Change in
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Pension
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Value and
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Fees
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Nonqualified
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Earned or
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Non-Equity
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Deferred
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Paid in
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Stock
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Option
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Incentive Plan
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Compensation
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All Other
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Cash
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Awards
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Awards
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Compensation
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Earnings
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Compensation
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Total
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Name(1)
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($)(2)
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($)
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($)(3)
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($)
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($)
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($)(4)
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($)
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Scott S. Cowen
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$
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95,000
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$
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158,660
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$
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90
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$
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253,750
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Jeffrey D. Dunn
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$
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87,500
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$
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158,660
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$
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90
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$
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246,250
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William E. MacDonald, III
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$
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97,500
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$
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158,660
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$
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90
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$
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256,250
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Michael J. Merriman, Jr.
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$
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87,500
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$
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158,660
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$
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90
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$
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246,250
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Charles A. Ratner
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$
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87,500
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$
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158,660
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$
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90
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$
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246,250
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Jerry Sue Thornton
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$
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85,000
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$
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158,660
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$
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90
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$
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243,750
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(1) |
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Zev Weiss, our Chief Executive Officer, Jeffrey Weiss, our
President and Chief Operating Officer, and Morry Weiss, our
Chairman, are not included in this table as they are employees
of American Greetings and thus receive no compensation for their
services as directors. As named executive officers, the
compensation received by Messrs. Zev and Jeffrey Weiss is
included in the Fiscal 2011 Summary Compensation Table.
Information concerning the compensation of Morry Weiss is
included below under Certain Relationships and Related
Transactions. |
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As described above, directors may elect to receive a portion of
their retainer or other fees in the form of shares. The amounts
in this column represent the annual retainer and any other fees
the non-employee director has earned or been paid in cash during
fiscal 2011. For the retainer and fees paid in fiscal 2011, all
of the independent directors were paid in cash. Mr. Dunn
and Dr. Thornton have each deferred all fees under the
outside directors deferred compensation plan. |
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(3) |
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Reflects the aggregate grant date fair value of stock options
granted to each director in fiscal 2011 in accordance with Topic
718. There were no option forfeitures for the directors in
fiscal 2011. Assumptions used in the calculation of these
amounts are included in footnote 15 to our audited financial
statements for fiscal 2011 included in our Annual Report on
Form 10-K
filed with the SEC on April 29, 2011. While these amounts
reflect the aggregate grant date fair value computed in
accordance with Topic 718, the aggregate grant date fair value
may not correspond to the actual value that will be recognized
by the director. The actual amount, if any, realized upon the
exercise of stock options will depend upon the market price of
our common shares relative to the exercise price per share of
the stock option at the time of exercise. As of
February 28, 2011, each director has the following number
of options outstanding: Dr. Cowen options to
purchase 69,000 Class A common shares;
Mr. Dunn options to purchase 44,000
Class A common shares; Mr. MacDonald
options to purchase 44,000 Class A common shares;
Mr. Merriman options to purchase 51,000
Class A common shares; Mr. Ratner options
to purchase 69,000 Class A common shares; and
Dr. Thornton options to purchase 69,000
Class A common shares. |
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(4) |
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Represents the estimated premiums paid by American Greetings
that may be attributable to a $250,000 accidental death and
dismemberment insurance policy covering each of our outside
directors. |
60
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Review
and Approval of Related Person Transactions
Policy. The Board has adopted a written policy
and procedures for review, approval and monitoring of
transactions involving American Greetings and related
persons, which generally includes directors, executive
officers and their immediate family members, and shareholders
owning five percent or greater of our outstanding stock and
their immediate family members. The policy covers related person
transactions that meet the minimum threshold for disclosure in
the proxy statement under the relevant rules of the SEC
(generally, transactions involving amounts exceeding $120,000 in
which a related person has a direct or indirect material
interest). Due to the nature of the transaction or the approvals
previously obtained, the policy considers the following
categories of transactions to be pre-approved even if the
aggregate amount involved exceeds $120,000:
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compensation paid to our executive officers and immediate family
members of our executive officers or directors that has been
approved or ratified by the Compensation Committee;
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compensation paid to our directors;
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transactions with another company at which a related
persons only relationship is as an employee (other than an
executive officer), director or beneficial owner of less than
10% of that companys shares, if the aggregate amount
involved does not exceed the greater of $1 million, or 2%
of that companys annual gross revenues;
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charitable contributions, grants or endowments by American
Greetings to a charitable organization at which a related
persons only relationship is as an employee (other than an
executive officer), director or trustee, if the aggregate amount
involved does not exceed the greater of $1 million or 2% of
the charitable organizations total annual receipts or
annual gross revenue (which transactions are generally approved
or ratified by our Nominating and Governance Committee);
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transactions where the related persons interest arises
solely from the ownership of our common shares and all holders
of our common shares received the same benefit on a pro rata
basis, such as dividends;
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transactions with a related person involving services such as a
bank depository of funds, transfer agent, registrar, trustee
under a trust indenture, or similar services; and
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any transaction with a related person involving the offer and
sale to the company of Class B common shares, or exchange
of Class B common shares for Class A common shares, in
each case provided such offer, sale or exchange is effected in
accordance with our articles of incorporation.
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Related person transactions not otherwise pre-approved as
described above must be approved or ratified by the Audit
Committee, which will consider all relevant facts in doing so.
As required under SEC rules, transactions that are determined to
be directly or indirectly material to American Greetings or a
related person are disclosed in the proxy statement.
Procedures. The American Greetings legal staff
is primarily responsible for developing and implementing
processes and controls to obtain information from the directors
and executive officers with respect to related person
transactions and for then determining, based on the facts and
circumstances, whether American Greetings or a related person
may have a direct or indirect material interest in the
transaction. If it is determined that American Greetings or a
related person may have a direct or indirect material interest
in the transaction, the legal department will submit the matter
to the Audit Committee for review and approval, if appropriate.
Any member of the Audit Committee who may have a direct or
indirect interest in the transaction in question must recuse
himself or herself from any consideration of the matter. The
Audit Committee will review all of the relevant facts and
circumstances of the transaction. Based on the conclusions
reached, the Audit Committee will evaluate all options,
including but not limited to approving, disapproving, or
restructuring the proposed transaction.
If it is not practical or desirable to wait until the next
regularly scheduled Audit Committee meeting to consider a
potential related person transaction, the matter will be
submitted to the chair of the Audit Committee, who has been
delegated the authority to act between meetings. The chair will
report any decisions
61
made to the Audit Committee at its next meeting. If management
becomes aware of a related person transaction that was not
previously reviewed or ratified, it will refer the matter to the
Audit Committee at its next regularly scheduled meeting at which
time the Audit Committee or the chair of the Audit Committee
shall evaluate all options, including but not limited to
ratification, amendment, or termination of the related person
transaction.
Related
Person Transactions
Morry Weiss, our Chairman of the Board, is the brother of Erwin
Weiss, our Senior Vice President, Enterprise Resource Planning,
and is the father of (1) Zev Weiss, a director of American
Greetings and our Chief Executive Officer, (2) Jeffrey
Weiss, a director of American Greetings and our President and
Chief Operating Officer, and (3) Gary Weiss, an American
Greetings employee and non-executive officer. As employees of
American Greetings, these individuals are compensated in a
manner that is appropriate for their responsibilities and
experience. The compensation paid to each of Messrs. Zev
and Jeffrey Weiss is described in the Summary Compensation Table
and in the tables that follow the Summary Compensation Table.
With respect to fiscal 2011, the following compensation was
accrued by, or paid to, Messrs. Morry, Erwin and
Gary Weiss, none of whom are named executive officers:
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Morry Weiss: With respect to fiscal 2011,
Mr. Morry Weiss was paid a base salary of $400,000, earned
incentive compensation under the Key Management Annual Incentive
Plan of $343,520 and participated in other regular and customary
employee benefit plans, programs and benefits generally
available to our executive officers, including participation in
the Supplemental Executive Retirement Plan and use of a company
car, as well as those described in the Compensation Discussion
and Analysis section under the headings Benefits and
Perquisites and Other Benefits. In addition, in
fiscal 2011, Mr. Morry Weiss was granted (i) options
to purchase 9,000 Class B common shares, which had a grant
date value as calculated in accordance with Topic 718 of
$95,196, and (ii) 2,300 RSUs, which had a grant date value
as calculated in accordance with Topic 718 of $54,895.
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Erwin Weiss: Under the terms of our employment
agreement with Mr. Erwin Weiss, during his employment,
Mr. Weiss will participate in any applicable fiscal year
annual incentive compensation plan, with his individual
performance component being calculated at a minimum of 100% of
the applicable fiscal year target incentive amount for Senior
Vice Presidents, which for fiscal 2011 was 70% of base salary.
If grants of stock options are made generally to Senior Vice
Presidents during his employment, Mr. Weisss
employment agreement provides that he will receive such grants.
If Mr. Weiss is voluntarily or involuntarily terminated,
his employment agreement provides that he will receive $250,000
in deferred compensation, as well as three years of base salary
at the rate in effect at the time of separation. With respect to
fiscal 2011, Mr. Erwin Weiss was paid a salary of $461,250,
earned incentive compensation under the Key Management Annual
Incentive Plan of $554,570 (all of which was deferred into the
Executive Deferred Compensation Plan) and participated in other
regular and customary employee benefit plans, programs and
benefits generally available to our executive officers,
including participation in the Supplemental Executive Retirement
Plan and use of a company car, as well as those described in the
Compensation Discussion and Analysis section under the headings
Benefits and Perquisites and Other
Benefits. In addition, in fiscal 2011, Mr. Erwin
Weiss was granted (i) options to purchase 11,000
Class A common shares, which had a grant date fair value of
$116,350 as calculated in accordance with Topic 718 and
(ii) 2,800 RSUs, which had a grant date value as calculated
in accordance with Topic 718 of $66,828.
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Gary Weiss: With respect to fiscal 2011,
Mr. Gary Weiss was paid a salary of $259,838, earned
incentive compensation under the Key Management Annual Incentive
Plan of $253,248 and participated in other regular and customary
employee benefit plans, programs and benefits generally
available to our employees. As a Vice President, Mr. Weiss
is a participant in the Supplemental Executive Retirement Plan,
is provided a company car and is entitled to receive those
benefits described in the Compensation Discussion and Analysis
section under the heading Benefits. In addition, in
fiscal 2011, Mr. Weiss was granted (i) options to
purchase 3,500 Class A common shares, which had a grant
date fair value of
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62
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$37,021 as calculated in accordance with Topic 718, and
(ii) 900 RSUs, which had a grant date value as calculated
in accordance with Topic 718 of $21,481.
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The foregoing compensation arrangements with Messrs. Morry,
Erwin and Gary Weiss were either approved by the Compensation
Committee in accordance with the related person transactions
policy or in place prior to our adoption of the related person
transactions policy and were therefore not subject to the policy.
It is the companys policy, as approved by the Board, to
repurchase Class B common shares, in accordance with the
terms set forth in the companys articles of incorporation,
whenever they are offered by a holder, unless such a repurchase
is not otherwise permitted under agreements to which the company
is a party. As such, in fiscal 2011, the company and the
following executive officers were also participants in the
following transactions:
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Jeffrey Weiss: On April 27, 2010,
Mr. Jeffrey Weiss sold to American Greetings 86,500
Class B common shares for $2,171,150. The company
repurchased the 86,500 shares at $25.10 per share, which,
as required by our articles of incorporation, was the closing
price on April 26, 2010, the last day for which sales were
publicly reported before the offer to sell was received by the
company. On May 4, 2010, Mr. Jeffrey Weiss sold to
American Greetings 50,500 Class B common shares for
$1,246,845. The company repurchased the shares at $24.69 per
share, which, as required by our articles of incorporation, was
the closing price on May 3, 2010, the last day for which
sales were publicly reported before the offer to sell was
received by the company.
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Morry Weiss: On April 30, 2010,
Mr. Morry Weiss sold 200,000 Class B common shares to
American Greetings for $5,066,000. The company repurchased the
shares at $25.33 per share, which, as required by our articles
of incorporation, was the closing price on April 29, 2010,
the last day for which sales were publicly reported before the
offer to sell was received by the company.
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Zev Weiss: On April 30, 2010,
Mr. Zev Weiss sold 96,445 Class B common shares to
American Greetings for $2,442,952. The company repurchased the
shares at $25.33 per share, which, as required by our articles
of incorporation, was the closing price on April 29, 2010,
the last day for which sales were publicly reported before the
offer to sell was received by the company.
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The foregoing transactions were pre-approved under our related
persons transaction policy.
63
REPORT OF
THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
This report provides information concerning the Audit Committee
of the Board.
The Audit Committee reviews our financial reporting practices on
behalf of the Board. Management is responsible for the financial
statements and the reporting process, including the system of
internal controls. The independent registered public accounting
firm is responsible for expressing an opinion on the conformity
of those audited financial statements with accounting principles
generally accepted in the United States.
In discharging its oversight responsibility as to the audit
process, the Audit Committee reviewed and discussed our audited
financial statements for the year ended February 28, 2011
with management, including a discussion of the quality, not just
the acceptability, of the accounting principles; the
reasonableness of significant judgments; and the clarity of
disclosures in the financial statements. The Audit Committee
discussed with the independent registered public accounting firm
their judgments as to the quality, not just the acceptability,
of our accounting principles and such other matters as are
required to be discussed by the Statement on Auditing Standards
No. 114, as amended (AICPA, Professional Standards,
Vol.1.AU Section 380), as adopted by the Public Company
Accounting Oversight Board in Rule 3200T. The Audit
Committee also obtained a formal written statement from the
independent registered public accounting firm that described all
of American Greetings relationships with the independent
registered public accounting firm that might bear on the
auditors independence as required by applicable
requirements of the Public Company Accounting Oversight Board.
The Audit Committee discussed with the independent registered
public accounting firm any relationships that might influence
its objectivity and independence and satisfied itself as to the
auditors independence. The Audit Committee also considered
whether the provision of non-audit services by Ernst &
Young LLP is compatible with maintaining Ernst & Young
LLPs independence. Management has the responsibility for
the preparation of American Greetings financial
statements, and the independent registered public accounting
firm has the responsibility for the auditing of those statements.
Based on the above-referenced review and discussions with
management and the independent registered public accounting
firm, the Audit Committee recommended to the Board that the
audited financial statements be included in its Annual Report on
Form 10-K
for the year ended February 28, 2011 for filing with the
SEC.
Audit Committee
William E. MacDonald, III, Chair
Scott S. Cowen
Jeffrey D. Dunn
Michael J. Merriman, Jr.
64
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Independent
Registered Public Accounting Firm
The firm of Ernst & Young LLP and its predecessors has
been our independent registered public accounting firm since our
incorporation in 1944. In connection with the audit of the
fiscal 2011 financial statements, we entered into an engagement
agreement with Ernst & Young LLP which sets forth the
terms by which Ernst & Young LLP would perform audit
services for us. That agreement is subject to alternative
dispute resolution procedures and an exclusion of punitive
damages. The Audit Committee has selected Ernst &
Young LLP as our independent registered public accounting firm
for fiscal 2012. Representatives of Ernst & Young LLP
will be present at the Annual Meeting and will have the
opportunity to make a statement if they desire to do so. They
will also be available to respond to appropriate questions.
Fees Paid
to Ernst & Young LLP
Audit Fees. The aggregate fees billed for
professional services rendered by Ernst & Young LLP
for the audit of our annual financial statements for fiscal 2011
and fiscal 2010, including the audit of the effectiveness of
internal control over financial reporting, and for
Ernst & Young LLPs reviews of the interim
financial statements included in our Quarterly Reports on
Forms 10-Q
filed with the SEC for fiscal 2011 and fiscal 2010 were
$1,635,100 and $1,757,500, respectively.
Audit-Related Fees. The aggregate fees billed
for assurance and related services by Ernst & Young
LLP that were reasonably related to the performance of the audit
or review of our financial statements and were not reported
under Audit Fees above for fiscal 2011 and fiscal
2010 were $0 and $4,500, respectively. Audit-related fees billed
in fiscal 2010 consisted of fees billed for audits of employee
benefit plans.
Tax Fees. The aggregate fees billed for
professional services rendered by Ernst & Young LLP
for tax compliance, tax advice and tax planning for fiscal 2011
and fiscal 2010 were $380,200 and $217,900, respectively. These
fees related primarily to tax compliance, tax consulting and
international tax matters.
All Other Fees. There were no fees billed for
other services provided by Ernst & Young LLP for
either fiscal 2011 or fiscal 2010.
Policy on Audit Committee Pre-Approval of Audit and
Permissible Non-Audit Services of Independent Registered Public
Accounting Firm. It is the Audit Committees
policy that all audit and non-audit services to be performed for
us by our independent registered public accounting firm be
preapproved by the Audit Committee (including the fees and terms
of such services), subject to the de minimis exceptions for
non-audit services described in the Exchange Act and the rules
and regulations thereunder. In accordance with such policy, the
Audit Committee preapproved 100% of the services described above
under the captions Audit, Audit-Related Fees and Tax Fees for
fiscal 2011 and fiscal 2010.
65
SECURITY
OWNERSHIP
Security
Ownership of Management
At the close of business on May 5, 2011, our 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 our common shares as
set forth in the following table:
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Deferred
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Amount & Nature
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Compensation
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of Beneficial
|
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Percent of Class
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|
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Plan Share
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Name
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Title of Class
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Ownership
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Outstanding
|
|
|
Equivalents(5)
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Scott S. Cowen
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Class A Common
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62,300
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(1)
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u
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Class B Common
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1,921
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(6)
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u
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Jeffrey D. Dunn
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Class A Common
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|
36,500
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(1)
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|
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u
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Class B Common
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|
|
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u
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|
|
|
|
|
|
|
|
William E. MacDonald, III
|
|
Class A Common
|
|
|
37,500
|
(1)
|
|
|
u
|
|
|
|
|
|
|
|
Class B Common
|
|
|
|
|
|
|
u
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael J. Merriman, Jr.
|
|
Class A Common
|
|
|
43,500
|
(1)
|
|
|
u
|
|
|
|
|
|
|
|
Class B Common
|
|
|
|
|
|
|
u
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles A. Ratner
|
|
Class A Common
|
|
|
76,379
|
(1)(6)
|
|
|
u
|
|
|
|
|
|
|
|
Class B Common
|
|
|
16,219
|
|
|
|
u
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jerry Sue Thornton
|
|
Class A Common
|
|
|
61,500
|
(1)
|
|
|
u
|
|
|
|
|
|
|
|
Class B Common
|
|
|
9,298
|
(6)
|
|
|
u
|
|
|
|
3,998
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Morry Weiss
|
|
Class A Common
|
|
|
19,310
|
(1)
|
|
|
u
|
|
|
|
|
|
|
|
Class B Common
|
|
|
319,591
|
(1)(2)(7)
|
|
|
10.83
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Zev Weiss
|
|
Class A Common
|
|
|
|
|
|
|
u
|
|
|
|
|
|
|
|
Class B Common
|
|
|
451,294
|
(1)(4)(6)
|
|
|
13.91
|
%
|
|
|
46,009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey Weiss
|
|
Class A Common
|
|
|
3,920
|
(3)
|
|
|
u
|
|
|
|
|
|
|
|
Class B Common
|
|
|
269,150
|
(1)(4)(6)
|
|
|
8.80
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen J. Smith
|
|
Class A Common
|
|
|
92,517
|
(1)
|
|
|
u
|
|
|
|
|
|
|
|
Class B Common
|
|
|
|
|
|
|
u
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John W. Beeder
|
|
Class A Common
|
|
|
10,938
|
(1)
|
|
|
u
|
|
|
|
14,500
|
|
|
|
Class B Common
|
|
|
|
|
|
|
u
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael L. Goulder
|
|
Class A Common
|
|
|
259,791
|
(1)
|
|
|
u
|
|
|
|
|
|
|
|
Class B Common
|
|
|
|
|
|
|
u
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Directors & Executive
|
|
Class A Common
|
|
|
1,321,100
|
(1)(3)(6)
|
|
|
3.41
|
%
|
|
|
14,500
|
|
Officers as a group (18 including the above)
|
|
Class B Common
|
|
|
1,067,473
|
(1)(2)(4)(6)(7)
|
|
|
29.74
|
%
|
|
|
50,007
|
|
|
|
|
u
|
|
less than 1.0% of class outstanding |
66
|
|
|
(1) |
|
Includes the following shares for the following individuals who
under
Rule 13d-3
of the Exchange Act are deemed to be beneficial owners of those
shares by having the right to acquire ownership thereof within
60 days of May 5, 2011 pursuant to outstanding stock
options: |
|
|
|
|
|
|
|
|
|
Scott S. Cowen
|
|
|
Class A Common
|
|
|
|
61,500
|
|
|
|
|
Class B Common
|
|
|
|
|
|
Jeffrey D. Dunn
|
|
|
Class A Common
|
|
|
|
36,500
|
|
|
|
|
Class B Common
|
|
|
|
|
|
William E. MacDonald, III
|
|
|
Class A Common
|
|
|
|
36,500
|
|
|
|
|
Class B Common
|
|
|
|
|
|
Michael J. Merriman, Jr.
|
|
|
Class A Common
|
|
|
|
43,500
|
|
|
|
|
Class B Common
|
|
|
|
|
|
Charles A. Ratner
|
|
|
Class A Common
|
|
|
|
61,500
|
|
|
|
|
Class B Common
|
|
|
|
|
|
Jerry Sue Thornton
|
|
|
Class A Common
|
|
|
|
61,500
|
|
|
|
|
Class B Common
|
|
|
|
|
|
Morry Weiss
|
|
|
Class A Common
|
|
|
|
19,310
|
|
|
|
|
Class B Common
|
|
|
|
111,155
|
|
Zev Weiss
|
|
|
Class A Common
|
|
|
|
|
|
|
|
|
Class B Common
|
|
|
|
412,973
|
|
Jeffrey Weiss
|
|
|
Class A Common
|
|
|
|
|
|
|
|
|
Class B Common
|
|
|
|
225,942
|
|
Stephen J. Smith
|
|
|
Class A Common
|
|
|
|
85,425
|
|
|
|
|
Class B Common
|
|
|
|
|
|
John W. Beeder
|
|
|
Class A Common
|
|
|
|
10,938
|
|
|
|
|
Class B Common
|
|
|
|
|
|
Michael L. Goulder
|
|
|
Class A Common
|
|
|
|
250,250
|
|
|
|
|
Class B Common
|
|
|
|
|
|
All Directors & Executive
|
|
|
Class A Common
|
|
|
|
1,190,616
|
|
Officers as a group (18 including the above)
|
|
|
Class B Common
|
|
|
|
750,070
|
|
|
|
|
(2) |
|
Includes 26,737 Class B common shares that have been
pledged as security for a loan from a financial institution.
Excludes the following shares with respect to which
Mr. Morry Weiss disclaims beneficial ownership: 78,800
Class B common shares beneficially owned by
Mr. Weisss wife, Judith Weiss; 203,964 Class B
common shares owned by the Irving I. Stone Foundation, of which
Mr. Weiss is a trustee; and 200,000 Class B common
shares owned by the Irving I. Stone Support Foundation, of which
Mr. Weiss is a trustee. |
|
(3) |
|
One of the investment alternatives in the American Greetings
Retirement Profit Sharing and Savings Plan is a fund made up of
our Class A common shares. As of May 5, 2011 the
Retirement Profit Sharing and Savings Plan held 940,228
Class A common shares. Participants investing in the
American Greetings stock fund are allocated units that
correspond to their investment in our common shares. The plan
purchases or sells Class A common shares in the open market
to reflect changes in participant investments in the American
Greetings stock fund. Although the actual number of common
shares in which a participant is invested directly corresponds
to the participants investment in the fund, the number of
Class A common shares that is allocated to a participant is
proportionate to the participants investment in the fund
relative to all participant investments in the fund.
Accordingly, the amounts include the following shares which,
under
Rule 13d-3
of the Exchange Act, are deemed to be beneficially owned by the
individuals as participants in the American Greetings stock fund
of the Retirement Profit Sharing and Savings Plan: 3,920 Class A
common shares held for the benefit of Jeffrey Weiss; and 13,144
Class A common shares held for the benefit of all Directors
and Executive Officers as a group. Each participant has voting
power with respect to the shares allocated to his or her account. |
|
(4) |
|
The amounts exclude the following shares with respect to which
each of Messrs. Zev and Jeffrey Weiss disclaims beneficial
ownership: 203,964 Class B common shares owned by the
Irving I. Stone Foundation, |
67
|
|
|
|
|
of which each of Messrs. Zev and Jeffrey Weiss is a
trustee; 200,000 Class B common shares owned by the Irving
I. Stone Support Foundation, of which each of Messrs. Zev
and Jeffrey Weiss is a trustee; and 1,812,182 Class B
common shares beneficially owned by the Irving I. Stone Limited
Liability Company and the Irving I. Stone Oversight Trust. Each
of Messrs. Zev and Jeffrey Weiss is a trustee of the Irving
I. Stone Oversight Trust and each own, in their individual
capacities, membership interests representing 24.5% of the
non-voting equity interests in the Irving I. Stone Limited
Liability Company. |
|
(5) |
|
Represents share equivalents credited to the accounts of the
named individual with respect to shares deferred under American
Greetings deferred compensation programs. These individuals have
neither voting power with respect to the shares allocated to the
individuals accounts, nor do the individuals have the
dispositive power or the right to acquire ownership of those
shares within 60 days. As a result, under
Rule 13d-3
of the Exchange Act, the shares are not considered to be
beneficially owned by the applicable individuals. |
|
(6) |
|
Includes the following common shares (including dividend
equivalents) that have been deferred by the following
individuals that, in accordance with the terms of the applicable
plan and their deferral election, (a) with respect to
deferred shares issuable to Mr. Zev Weiss and
Mr. Jeffrey Weiss, will be distributed within 60 days of
May 5, 2011 and (b) with respect to the deferred
shares issuable to
non-employee
directors, would be distributed within 60 days of May 5,
2011 if such non-employee director retired as a director on or
within 60 days after May 5, 2011: |
Scott S. Cowen: 1,921 Class B common shares
Charles A. Ratner: 6,879 Class A common shares
Jerry Sue Thornton: 9,298 Class B common shares
Zev Weiss 38,321 Class B common shares
Jeffrey Weiss 28,741 Class B common shares
|
|
|
(7) |
|
Includes 8,436 Class B common shares that are issuable
under performance shares that have been credited to
Mr. Morry Weiss but that have not vested, such shares being
issuable upon Mr. Weisss retirement in accordance
with the terms of the respective grant agreements. |
68
Security
Ownership of Certain Beneficial Owners
In addition to Morry Weiss, Zev Weiss and Jeffrey Weiss, each of
whose business address is One American Road, Cleveland, Ohio
44144 and whose share ownership is presented above, the
following table presents certain information regarding other
shareholders who are known to us to be beneficial owners of more
than 5% of our voting securities as of the close of business on
May 5, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount & Nature
|
|
Percent
|
|
|
|
|
of Beneficial
|
|
of Class
|
Name and Address
|
|
Title of Class
|
|
Ownership
|
|
Outstanding
|
|
M.A.M. Investments Ltd., et al
|
|
Class A Common
|
|
|
4,424,402
|
(1)
|
|
|
11.77
|
%
|
Orion House, 5 Upper St. Martins Lane
|
|
Class B Common
|
|
|
|
|
|
|
u
|
|
London WC2H 9EA, United Kingdom
|
|
|
|
|
|
|
|
|
|
|
Dimensional Funds Advisors LP
|
|
Class A Common
|
|
|
3,356,761
|
(2)
|
|
|
8.93
|
%
|
Palisades West, Building One,
|
|
Class B Common
|
|
|
|
|
|
|
u
|
|
6300 Bee Cave Road
|
|
|
|
|
|
|
|
|
|
|
Au |