EX-10.1



 





Exhibit __________









 









 




      





      






      



				
	 	 
	 	 
	TABLE OF CONTENTS






	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Eligibility
	 	 	1	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	How the Plan Works
	 	 	2	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Your Individual Target Incentive
	 	 	2	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Weighting the Measures
	 	 	3	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Measuring Performance
	 	 	4	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Performance Multipliers
	 	 	4	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Performance Measures
	 	 	5	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Corporate Performance
	 	 	5	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Business Unit Performance
	 	 	6	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Individual Performance
	 	 	7	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Summary — Total Award Calculation
	 	 	8	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Appendix
	 	 	9	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Business Unit Plan Components
	 	 	9	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Administrative Details
	 	 	10	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Definition of Common Terms
	 	 	11	 	 	 	 	 











 









 





				
	AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN


	 	 	 
	 

	 	 	 
	 	 
	 	1






AMERICAN GREETINGS

KEY MANAGEMENT

ANNUAL INCENTIVE PLAN



This brochure provides an overview of the Key Management Annual Incentive Plan — a valuable
component of your total compensation package. It contains details about how the Plan rewards for
Corporate, Business Unit and Individual performance results. In addition, your Incentive
Compensation Statement — provided separately — includes information specific to your participation
in the plan: your assigned business unit and sub-business unit if any, your target






incentive percentage and detailed examples of the incentive calculation under different performance
scenarios. Together, these documents provide the information you need to understand the Plan so you
can maximize your annual incentive award.




n ELIGIBILITY



You are eligible to participate in the Key Management Annual Incentive Plan if you are a Key
Manager or Officer in one of the following primary business units and you do not participate in
another Company-sponsored annual incentive plan:












      







	 	 	 	 	 	 
	 	PRIMARY BUSINESS UNIT	 	 	PARTICIPANTS	 
	 	 	 	 	 	 
	 	Corporate Consolidated

	 	 	Chairman, Chief Executive Officer, President and	 
	 	 

	 	 	Chief Operating Officer and other Section 16	 
	 	 

	 	 	Executive Officers	 
	 	 	 	 	 	 
	 	Total Social Expressions Group (SEG)

	 	 	Associates who are part of:	 
	 	 

	 	 	AGI In Store	 
	 	 

	 	 	Business Intelligence	 
	 	 

	 	 	Canada	 
	 	 

	 	 	Carlton Mexico	 
	 	 

	 	 	Carlton Retail	 
	 	 

	 	 	Corporate Staff (Delta, Finance, HR, ISD, Legal)	 
	 	 

	 	 	Creative	 
	 	 

	 	 	DesignWare & Specialty SBU	 
	 	 

	 	 	Everyday & Seasonal Cards	 
	 	 

	 	 	Field Sales	 
	 	 

	 	 	Field Sales Operations (FSO)	 
	 	 

	 	 	Gift Packaging & Holiday SBU	 
	 	 

	 	 	Global Sourcing	 
	 	 

	 	 	Inbound Licensing	 
	 	 

	 	 	Invention Lab	 
	 	 

	 	 	Plants	 
	 	 

	 	 	All other North American Greeting Card	 
	 	 

	 	 	  Division units	 
	 	 	 	 	 	 
	 	AG Intellectual Properties Group

	 	 	AGIP Corporate Staff	 
	 	 	 	 	 	 
	 	AG Interactive

	 	 	AG Interactive associates	 
	 	 	 	 	 	 
	 	AG Properties

	 	 	AG Properties associates	 
	 	 	 	 	 	 
	 	UK Greetings

	 	 	UK Greetings associates	 
	 	 	 	 	 	 
	 	John Sands Group

	 	 	John Sands Group associates	 
	 	 	 	 	 	 
	 
	Key Managers include individuals in Key Manager 1 and Key Manager 2 job levels. Officers
include Corporate-level Executive Directors, Vice Presidents, Senior Vice Presidents, President and
Chief Operating Officer, Chief Executive Officer, Chairman of the Board and any other job level(s)
that may be designated.
















 









 





	 	 	 	 
	 

	 	 	AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN



	 	 	 	 
	2

	 	 	 











n HOW THE PLAN WORKS



The Key Management Annual Incentive Plan rewards participants for their contributions to
American Greetings success over a 12-month fiscal year. The Plan rewards for successful results in
three key performance areas:





	§	 	Corporate Performance. At the beginning of each fiscal year, the American Greetings
Board of Directors approves the corporate earnings per share (EPS) goal for the year. Actual
corporate results are compared to this goal at the end of the fiscal year.
	 
	§	 	Business Unit Performance. Every year, each business unit develops an earnings goal —
which is approved by the Board of Directors — based on its strategic direction, business
opportunities and growth projections. Business unit performance is based on actual fiscal year
earnings results for your assigned business unit compared to goal.
	 
	§	 	Individual Performance. Your manager will determine your individual performance
compared to your objectives for the year. Your actual fiscal year-end performance rating
determines the percentage of the target individual incentive amount you earn.




At the end of each fiscal year, incentive amounts are determined based on performance in these
three areas and are added together to determine your total Key Management Annual Incentive Plan
award.











The total award — which is paid in cash — can range from 0% to 200% of your individual target
incentive. This provides significant incentive earnings opportunity when performance in one or more
of these performance areas exceeds expectations.



Let’s take a look at the components of the Plan and how they work.




YOUR INDIVIDUAL TARGET INCENTIVE



At the beginning of each fiscal year, an individual target incentive is established for you based
on your job level. This target incentive is typically communicated as a percentage of your base
earnings but may also be expressed as a dollar amount, determined by multiplying your base earnings
by your target incentive percentage as follows:








The target incentive represents what you would earn if each performance measure in this incentive
plan (Corporate, Business Unit and Individual) were achieved at 100% of goal (i.e., all components
achieve their target performance).




	 	 	 
	 

	 	 

	 

	 	EXAMPLE
	 
	 	 
	 

	 	For example, assume Joe is a Key Manager 1 with base earnings of $60,000. His target incentive
under the Plan is 10%, or $6,000 ($60,000 x 10% = $6,000).
	 
	 	 
	 

	 	We’ll refer to Joe throughout this brochure as we describe how the Plan works.
	 

	 	 














 









 





	 	 	 	 	 	 
	AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN	 	 	 	 
	 
	 	 	 	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 
	 

	 	 	 	3	 
	 
	 	 	 	 	 






WEIGHTING THE MEASURES



Performance measures are weighted by job level to reflect the degree to which positions within a
job level can affect performance in each of the three performance measurement areas. Accordingly,
associates at higher job levels — who have more impact on the achievement of corporate objectives —
have more weight assigned to the corporate performance measure. Lower job levels, in contrast, have
more weight assigned to the business unit performance measure.



The following chart shows the specific weightings for each job level for fiscal year 2008.















	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	FISCAL YEAR 2008 WEIGHTINGS
	 	JOB LEVEL	 	 	Corporate	 	 	Business Unit	 	 	Individual
	 	 	 	 	 	 	 	 	 	 	 
	 	Chairman of the Board, CEO, President
and COO, Senior Vice Presidents and other
Section 16 Executive Officers
	 	 	30%	 	 	40%	 	 	30%
	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 
	 	Vice Presidents, Executive Directors,
Key Managers 2, Key Managers 1
	 	 	20%	 	 	50%	 	 	30%
	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 









 
EXAMPLE



Joe, a Key Manager 1 with base earnings of $60,000 and a 10% incentive target, would have the
following set of performance measure weightings and target incentive awards:










	Corporate            Business Unit            Individual            Total
Key Manager 1 Weightings 20% 50% 30% 100%




	Joe’s Target Incentive 2% 5% 3% 10% (Percent of Base Earnings) (10% x 20%) (10% x 50%) (10% x
30%)




	Joe’s Target Incentive ($) $1,200$3,000$1,800 $6,000
($ 60,000 x 2%) ($60,000 x 5%) ($60,000 x 3%)












      










 









 






	 	 	 	 
	 	 	AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN
	 
	 	 	 
	 	 	 	 
	 
	 	 	 
	4
	 	 	 
	 
	 	 	 







MEASURING PERFORMANCE




At the beginning of each fiscal year, the American Greetings Board of Directors approves the
corporate earnings per share (EPS) goal for the coming year. This goal provides the context within
which each business unit then sets its earnings goal.




Corporate and business unit actual earnings performance is determined at the end of the fiscal year
and expressed as a percentage of the earnings goal. In contrast, individual results are evaluated
by your manager at fiscal year-end and communicated as an individual performance rating. If the
corporation’s or your business unit’s results exceed or fall below the earnings goal, Plan payouts
are adjusted.












PERFORMANCE THRESHOLD




The corporate performance threshold is 90% of the fiscal year earnings goal.









	 	n	 	Below Target Performance. If actual earnings results do not meet a minimum level of
performance — the performance threshold — no incentive award is earned for that performance
measure. Earnings results that fall between threshold and goal result in a reduced incentive
award.
	 
	 	n	 	Target Performance. When actual results meet the earnings goal, you receive 100% of
the target incentive award for that performance measure.
	 
	 	n	 	Above Target Performance. When actual results exceed the earnings goal, you can
receive up to 200% of the targeted incentive award for that performance measure.






As described above, there is a precise relationship between actual earnings results and the
corresponding incentive award. As performance rises or falls, so does your incentive award. But how
much your award changes as performance varies is determined by something called a performance
multiplier, which is discussed in the following section.






PERFORMANCE MULTIPLIERS



The performance multiplier is used to calculate the corporate and business unit incentive awards
when performance is above or below goal, provided the performance thresholds have been achieved.



Corporate and business unit performance incrementally increase your incentive award for performance
above goal. They also incrementally decrease your incentive award for performance below goal.



For example, a multiplier of 4 means that for every 1% increase or decrease in the percentage of
goal achieved, there is a corresponding 4% increase or decrease in the percentage of target
incentive earned.



The formula below illustrates the role of the performance multiplier in determining the adjustment
that is made to your incentive target based on actual performance achieved.








	Example of a performance adjustment when the percent of goal achieved is 105% and the
performance multiplier is 4




	100% + ( 4x 5% ) = 120%




	Target            Performance Results Above Performance Performance            Multiplier            Goal            Adjustment




Important Note: Business unit performance multipliers vary by business unit. The multiplier
assigned to your business unit is provided in your fiscal year 2008 Incentive Plan Statement. A
list of all business unit multipliers is provided in the Appendix.









 









 





	 	 	 	 	 	 
	AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN	 	 	 	 
	 
	 	 	 	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 
	 

	 	 	 	5	 
	 
	 	 	 	 	 







	n	 	PERFORMANCE MEASURES





CORPORATE PERFORMANCE



Corporate performance is based on fiscal year-end corporate earnings per share compared to goal.
Minimum performance of 90% of goal must be attained before any incentive is earned. From that point
forward, incentive awards are determined using a performance multiplier of 4 as illustrated in the
example below.







      












	CORPORATE PERFORMANCE




	+




	BUSINESS UNIT
PERFORMANCE




	+




	INDIVIDUAL PERFORMANCE












EXAMPLE



Joe is a KM1 with $60,000 in base earnings. Let’s assume corporate EPS performance at
year-end is 105% of goal. Joe’s corporate incentive award is calculated in three steps:





	 	1.	 	Determine the corporate performance adjustment factor
	 
	 	2.	 	Apply the corporate performance adjustment to Joe’s target incentive percentage for the
corporate component
	 
	 	3.	 	Multiply the result by Joe’s base earnings

















	100% + ( 4 x 5% ) = 120%




	Target Performance Corporate Results Above Goal Performance Adjustment
Performance Multiplier




	CORPORATE INCENTIVE Joe’s Target
Incentive 2%




	Performance Adjustment x 120% Joe’s Base Earnings
x $60,000 Joe’s Incentive Earned = $1,440








      








 









 





	 	 	 	 
	 	 	AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN
	 
	 	 	 
	 	 	 
	 
	 	 	 
	6
	 	 	 
	 
	 	 	 







BUSINESS UNIT PERFORMANCE




Business unit performance is based on fiscal year-end earnings results compared to goal. All
associates are assigned to a primary business unit. However, some will also be assigned to a
sub-business unit based on business conditions and American Greetings strategic priorities.




Business unit and sub-business unit performance measures will vary, but your primary business unit
measure will be one of the following:




	 	n	 	Business Unit Pro Forma Earnings Before Interest and Taxes (Business Unit Pro Forma
EBIT), or
	 
	 	n	 	Corporate Earnings Before Interest and Taxes (Corporate EBIT).






Earnings are charged/credited for any variation from plan in Net Capital Employed at the weighted
average cost of capital. Performance is based on fiscal year-end earnings compared to goal.




The incentive is earned when the performance threshold for the primary business unit (or
sub-business unit, where applicable) is achieved.







	n	 	The performance threshold for all primary and sub-business units, except for Carlton
Cards Retail, is 90% of goal.
	 
	n	 	The performance threshold for Carlton Cards Retail is 60% of goal.




A listing of each business unit’s and sub-business unit’s assigned earnings measure(s) and
performance multipliers are provided in the Appendix. An example of the calculation of this
incentive follows.








	CORPORATE PERFORMANCE




	+




	BUSINESS UNIT
PERFORMANCE




	+




	INDIVIDUAL PERFORMANCE










      














EXAMPLE


Joe is a KM1 with $60,000 in base earnings. Let’s assume his Business Unit has a
performance multiplier of 4 and that its performance at year-end is 96% of goal. Joe’s
business unit incentive award is calculated in three steps:





	 	1.	 	Determine the business unit performance adjustment
	 
	 	2.	 	Apply the business unit performance adjustment to Joe’s target incentive percentage for
the business unit component
	 
	 	3.	 	Multiply the result by Joe’s base earnings















	100% + ( 4 x — 4% ) = 84%




	Target Performance Business Unit Results Below Goal Business Unit
Performance Multiplier Performance Adjustment




	BUSINESS UNIT INCENTIVE Joe’s Target
Incentive 5%




	Performance Adjustment x 84% Joe’s Base Earnings x
$60,000 Joe’s Incentive Earned = $2,520










     




 









 





			
	AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN



	 
	 
	 	7
	 
	 







INDIVIDUAL PERFORMANCE



At the end of the fiscal year, managers assess each participant’s performance compared to
other participants within the business unit. Managers determine the degree to which the
participants achieve the goals and job expectations defined at the beginning of the year.



Managers rank participants based on their relative performance and determine the actual
performance rating based on these rankings and the targeted percentage of participants for
each rating.





	§	 	Participants who receive an
“Exceeds Expectations” performance
rating receive the target incentive for
the individual performance measure
multiplied by 150%. In certain
circumstances, this target can be
increased to 200%1.
	 
	§	 	Participants who receive a “Meets
Expectations” rating will receive 100% of
their target individual incentive.
	 
	§	 	Participants who receive an
“Improvement Expected/ Performance Below
Peer Level” rating will not receive an
individual performance incentive and will
only receive 50% of any incentive
otherwise earned.







If corporate earnings performance is below the
performance threshold, only those associates with
a performance rating of “Exceeds Expectations”
may receive awards for the individual performance
measure.





	§	 	Participants who receive an
“Exceeds Expectations” performance
rating will receive 50% of the target
incentive payable for the individual
performance component.






	§	 	Participants who receive a “Meets
Expectations” or “Improvement Expected/Below
Peer Level” performance rating will not
receive any portion of the individual
performance incentive.




If you are a senior executive officer, please
refer to the fiscal year 2008 Addendum to the
Individual Performance Component, included with
your personalized Incentive Compensation
Statement, for a complete description of how
individual performance under the Key Management
Annual Incentive Plan applies to you.


































The following schedule shows how individual amounts will be adjusted based on individual
performance.











 




		
	1 	Managers can, at their discretion, increase the Individual Payout Percentage to
200% for associates rated as “Exceeds Expectations” who demonstrate an extraordinary level of
performance. Accomplishments must be the result of extraordinary effort and initiative that go well
beyond the contributions of other associates rated as “Exceeds Expectations.” The number of persons
eligible to receive an Individual Payout Percentage of 200% may not exceed one-third of the total
number of associates rated as “Exceeds Expectations.”




 









 










			
	 	AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN




	8	 
	 
	 
	 










n SUMMARY—TOTAL AWARD CALCULATION



At the end of American Greetings fiscal year, corporate, business unit and individual
results are evaluated and your total incentive award is calculated.






	 	 	 	 	 
	EXAMPLE	 	 	 
	 
	The following example shows how Joe’s actual incentive award is calculated based on the assumptions that were used throughout this brochure:
	 
	 	JOE’S
ASSUMPTIONS	 	PERFORMANCE
ASSUMPTIONS
	 
	 	Base Earnings:	$60,000	Corporate:	105% of Goal
	 
	 	Individual Target Percentage: 	10%	Business Unit:	96% of Goal
	 
	 	Individual Target Incentive:	$6,000	Individual:	Exceeds Expectations
















 









 






			
	AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN


	 
	 
	 	9
	 
	 








n APPENDIX



The following section provides additional details about the plan, including details
about the business units, their performance measures and performance multipliers.



Please note that some plan participants will have their business unit incentive determined based
on performance in two areas. Details about the weightings and performance multipliers for these
measures are shown below and on your personalized Incentive Compensation Statement, as
appropriate.













	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	BUSINESS UNIT COMPONENTS
	 	BUSINESS UNIT/	 	 	PERFORMANCE	 	 	 	 	 	 	 	 	 	 	 	 	PERFORMANCE	 
	 	PARTICIPANTS	 	 	MEASURE	 	 	WEIGHT	 	 	MULTIPLIER	 
	 		 	 	Primary Unit	 	 	Sub Unit	 	 	Primary Unit	 	 	Sub Unit	 	 	Primary Unit	 	 	Sub Unit	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Corporate Consolidated
Chairman, CEO, President
and COO and Section 16
Executive Officers

	 	 	Corporate EBIT
	 	 	 	 	 	 	100	%	 	 	 	 	 	 	 	 	4	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Business Intelligence, 

Canada, Carlton Mexico, 

Corporate Staff (Delta, 

Finance, HR, ISD, Legal), 

Creative, DesignWare &

Specialty SBU, Everyday

& Seasonal Cards, Field 

Sales, FSO, Gift Packaging 
& Holiday SBU, 

Global Sourcing, Invention 

Lab, Plants, all other 

North American Greeting 

Card Division units

	 	 	Total SEG(1)
	 	 	 	 	 	 	100	%	 	 	 	 	 	 	 	 	4	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Inbound Licensing

	 	 	Total SEG(1)
	 	 	AG Interactive pro forma EBIT
	 	 	 	50	%	 	 	 	50	%	 	 	 	4	 	 	 	 	2	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	AGI In Store

	 	 	Total SEG(1)
	 	 	AGI In Store pro forma EBIT
	 	 	 	50	%	 	 	 	50	%	 	 	 	4	 	 	 	 	2	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Carlton Cards Retail

	 	 	Total SEG(1)
	 	 	Carlton Cards Retail pro forma EBIT
	 	 	 	25	%	 	 	 	75	%	 	 	 	4	 	 	 	 	1	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	AG Intellectual Properties

Group – Corporate Staff

	 	 	AG Interactive pro forma EBIT +

AG Properties pro forma EBIT
	 	 	 	 	 	 	100	%	 	 	 	 	 	 	 	 	2	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	AG Interactive

	 	 	AG Interactive pro forma EBIT
	 	 	 	 	 	 	100	%	 	 	 	 	 	 	 	 	2	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	AG Properties

	 	 	AG Properties pro forma EBIT
	 	 	 	 	 	 	100	%	 	 	 	 	 	 	 	 	2	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	UK Greetings

	 	 	UK Greetings pro forma EBIT
	 	 	 	 	 	 	100	%	 	 	 	 	 	 	 	 	4	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	John Sands Group

	 	 	John Sands Group pro forma EBIT
	 	 	 	 	 	 	100	%	 	 	 	 	 	 	 	 	2	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 









 




			
	(1)	 	Total SEG = NAGCD pro forma EBIT (includes Carlton Mexico pro forma EBIT, Retail
Eliminations and Corporate Expense) + Carlton Cards Retail pro forma EBIT + AGI In Store pro forma
EBIT




 









 










			
	 	AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN




	10	 
	 
	 
	 












ADMINISTRATIVE DETAILS



If your employment status changes, your Plan
participation and any payouts may be affected as
described below.





	§	 	New Hires. If you are hired
during the Plan year —defined as the
American Greetings fiscal year ending
February 29, 2008 — and are eligible to
participate in the Key Management Annual
Incentive Plan, you will receive a
prorated incentive payout based on the
period of time you participated in the
Plan and your base earnings during that
time.
	 
	§	 	Promotions and Transfers. If you
are promoted or you move from one business
unit to another during the Plan year, your
individual target incentive, base earnings,
business unit goal and corresponding
performance multiplier may change. If any of
these do change, your incentive will be
calculated based on the targets, base
earnings, plan provisions and actual
performance for each business unit you
participated in on a prorated basis basis
and rounded to the nearest full month.
	 
	§	 	Termination. If you voluntarily
or involuntarily leave American Greetings
before the completion of the Plan year,
you will forfeit your Key Management
Annual Incentive Plan award for that
fiscal year.
	 
	§	 	Retirement, Leave of Absence,
Disability, Death. If your employment
ends during the Plan year because you
elect to retire after age 60, or if you
take a leave of absence, suffer a
permanent disability or die, your
incentive payout will be prorated to the
nearest full month based on the actual
period you participated in the Plan
during the year.
	 
	 	 	An associate will be deemed to
suffer a permanent disability only in the
following circumstances: (A) where an
associate is absent from employment with
American Greetings due to his or her
inability to engage in any substantial
gainful activity by reason of any medically
determinable physical or mental impairment,
which either can be expected to result in
death, or can be expected to last for a
continuous period of not less than 12
months; or (B) where an associate is
scheduled









	 	 	to receive income replacement benefits for a
period of not less than 3 months under an
accident and health plan covering American
Greetings associate on account of a medically
determinable physical or mental impairment that
can be expected to result in death or last for
a continuous period of not less than 12 months.
	 
	§	 	Incentive Payout. Incentive
payouts earned in fiscal year 2008 will be
paid to participants within two and
one-half months following the end of fiscal
2008, typically within 60 days after the
end of the fiscal year. Incentive payouts
are subject to normal tax withholding at a
standardized rate and will be deposited to
a bank account of your choice.
	 
	§	 	It is the intent that incentive
payouts fall under the short-term deferral
rules of Section 409A of the Internal
Revenue Code to exempt the payment of such
Key Management Annual Incentive Plan
benefits from the requirements of Section
409A.
	 
	§	 	Calculating Payouts. For
computation purposes, financial goals
and actual performance results are
rounded to the nearest $1,000. The
percent of the financial goal achieved
and the percent of target bonus earned
is rounded to the nearest one-tenth of
one percent. The actual incentive payout
is rounded to the nearest dollar.
	 
	§	 	Omnibus Incentive Plan. The Key
Management Annual Incentive Plan is
governed by the American Greetings
Corporation 2007 Omnibus Incentive
Compensation Plan, as such plan may be
amended from time to time. In the event of
a conflict between the Key Management
Annual Incentive Plan and the Omnibus
Incentive Plan, the terms of the Omnibus
Incentive Plan will govern.
	 
	§	 	Questions. If you have questions
about the Key Management Annual Incentive
Plan and how it works, please contact your
manager. Your manager will work with you
to ensure you understand the Plan so you
can maximize your annual incentive.











 









 





			
	AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN


	 
	 
	 	11
	 
	 







DEFINITION OF COMMON TERMS



The following provides definitions of some common
terms used throughout this brochure. Capitalized
terms used herein that are not defined will have
the meaning set forth in the Omnibus Incentive
Plan.





	§	 	Base Earnings. Your base earnings
are defined as your base salary earned
during the fiscal year. Base earnings
exclude health and welfare benefits, bonus,
commission, and incentive payments, overtime
and other indirect compensation. Base
earnings for Plan participants outside of
the U.S. may be defined differently and may
vary by country.
	 
	§	 	Business Unit EBIT. A business unit’s
earnings before interest and taxes.
	 
	§	 	Business Unit Pro Forma EBIT. A
business unit’s earnings before interest and
taxes, charged/credited for any variation
from plan in Net Capital Employed at the
weighted average cost of capital.
	§	 	Corporate Earnings Per Share (EPS).
Corporate earnings per share is measured at the
end of the fiscal year and is calculated as
corporate pre-tax income minus taxes divided by
the total number of planned shares outstanding
as calculated on a fully diluted basis.









	§	 	Corporate Earnings Before Interest and
Taxes (Corporate EBIT). Consolidated corporate
earnings before interest and taxes,
charged/credited for any variation from plan in
Net Capital Employed at the weighted average
cost of capital.
	 
	§	 	Fiscal Year. March 1 through
February 28 or 29 of the following
calendar year.
	 
	§	 	Net Capital Employed (NCE). Assets
(minus cash and LIFO reserve) minus liabilities
(not including interest-bearing debt,
inter-company payables and income taxes).










 









 





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Nothing in this brochure or in any individual Incentive Compensation Statement should be construed
to create or imply any contract of employment between an associate and American Greetings and its
subsidiaries or to create any binding contractual right to payment of any specific amount under the
American Greetings Key Management Annual Incentive Plan. The provisions of this brochure describe
the general guidelines used by American Greetings in determining the benefits payable to Plan
participants; however, in every case, American Greetings reserves the right to reduce or eliminate
the amount that would otherwise be payable to a participant or participants under such guidelines
where it determines, in its discretion, that such a reduction is necessary or appropriate, in light
of the participant’s performance or other relevant business circumstances.



American Greetings reserves the right to terminate or make changes to the Plan, including
retroactively, at any time without prior notice to any of the Plan’s participants (provided, that
no amendment to the Plan adopted more than 90 days after the beginning of the applicable fiscal
year may have the effect of increasing the amount that is or could be payable under the guidelines
set forth herein for such fiscal year to any participant who is a “covered employee” of American
Greetings as defined in section 162(m)(3) of the Internal Revenue Code). In the case of our
executive officers, the Board of Directors (or committee thereof), and in the case of all other
participants, the Board of Directors (or committee thereof), the Chief Executive Officer and the
Chairman are the only persons who have the authority to alter or amend this Plan. Any such
alteration or amendment must be done in writing. No participant should rely on an alteration or
amendment to this Plan unless it is made in writing and signed by the Chief Executive Officer or
the Chairman.




 









 













 









 













SENIOR EXECUTIVE OFFICER

ADDENDUM TO INDIVIDUAL PERFORMANCE COMPONENT OF

FY2008 AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN





Individual Performance

Notwithstanding the description of the Individual Performance component included in the brochure
(the “Plan Brochure”) outlining the Fiscal 2008 Key Management Annual Incentive Plan, the
Individual Performance component of American Greetings Key Management Annual Incentive Plan for all
Senior Executive Officers of American Greetings, including the Corporation’s Chairman, Chief
Executive Officer, President and Chief Operating Officer, Senior Vice Presidents and other Section
16 officers (collectively the “Senior Executive Officers”) is modified by this Addendum as
follows:





	 	§	 	A new performance rating of “Satisfactory” has been added to categorize the
achievement of goals and objectives at an overall performance level that is greater than
the “Improvement Expected / Performance Below Peer Level” performance rating, but less
than the “Meets Expectations” rating.
	 
	 	§	 	There is not a specified target for the percentage of officers to be rated
either as “Satisfactory” or “Meets Expectations”; however, on a combined basis, the
targeted percentage of Senior Executive Officers to be rated “Meets Expectations” or
“Satisfactory” is 60%.




Accordingly, as with all participants in the Key Management Annual Incentive






Plan, at the end of
the fiscal year, managers assess each participant’s performance compared to other participants
within the business unit. Managers determine the degree to which the participants achieve the goals
and job expectations defined at the beginning of the year.



Managers rank participants based on their relative performance and determine actual performance
ratings based on these rankings and the targeted percentage of participants for each rating.





	 	§	 	For Senior Executive Officers, the targeted percentage of participants for the
“Exceeds” Performance rating is 30%; the targeted percentage for the “Meets Expectations”
or “Satisfactory” performance ratings on a combined basis is 60%; and the targeted
percentage for the “Improvement Expected / Performance Below Peer Level” is 10%. (See
chart on the following page.)
	 
	 	§	 	As with other participants, Senior Executive Officers who receive an “Exceeds
Expectations” performance rating receive the target incentive for the individual
performance measure multiplied by 150%. In certain circumstances, this target can be
increased to 200%. (1) 
	 
	 	§	 	As with other participants, Senior Executive Officers who receive a










 









 








	 	 	 	“Meets Expectations” rating will receive 100% of their target individual incentive.
	 
	 	§	 	Senior Executive Officers who receive a “Satisfactory” rating
will receive 50% of their target individual incentive.
	 
	 	§	 	As with other participants, Senior Executive Officers who receive an
“Improvement Expected / Performance Below Peer Level” rating will not receive an
individual performance incentive and will only receive 50% of any incentive otherwise
earned.




As with other participants, if corporate earnings performance is below the performance threshold,
only those Senior Executive Officers with a performance rating of “Exceeds Expectations” may
receive awards for the individual performance measure.





	 	§	 	Participants, including Senior Executive Officers, who receive an “Exceeds
Expectations” performance rating, will receive 50% of the target incentive payable for the
individual performance component.
	 
	 	§	 	Senior Executives who receive a “Meets Expectations”, “Satisfactory”, or
“Improvement Expected / Below Peer Level” performance rating will not receive any portion
of the individual performance incentive.




The following schedule shows how individual amounts will be adjusted based on individual
performance.













(1) As with other participants, managers can, at their discretion, increase the
Individual Payout percentage to 200% for associates, including Senior Executive Officers, rated as
“Exceeds Expectations” who demonstrate an extraordinary level of performance. Accomplishments must
be the result of extraordinary effort and initiative that go well beyond the contribution of other
associates rated as “Exceeds Expectations”. The number of persons eligible to receive an
Individual Payout Percentage of 200% may not exceed one-third of the total number of Senior
Executives rated as “Exceeds Expectations”.




Except as set forth in this Addendum, the description of the Key Management Annual Incentive
Plan included in the Plan Brochure remains unchanged. In the event of a conflict between the terms
described in the Plan Brochure and this Addendum, the terms set forth in this Addendum will govern.