EX-10.XXVII Key Management Annual Incentive Plan 2005

Exhibit 10 (xxvii)

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 year. If your employment ends during the plan year because you elect to retire after age 60, 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.

n HOW THE PLAN WORKS

The Key Management Annual Incentive Plan is designed to focus on those performance factors that will enable American Greetings to be successful. Two of the keys to our success are our earnings and stock performance. Earnings performance and value creation will ensure we remain a major competitor in our industry. The Key Management Annual Incentive Plan will measure each business unit’s earnings performance and our corporate earnings per share performance and will reward you for your performance when defined goals and objectives are achieved.

The actual incentive you receive will be based on your individual target incentive, your business unit’s achievement of its earnings goal, corporate earnings per share performance and your individual performance.

Let’s take a look at the components of the Plan and how it works.

YOUR INDIVIDUAL TARGET INCENTIVE

At the beginning of each fiscal year, an individual target incentive will be established for you based on your position. The target is a percentage of your base earnings. Your individual target incentive is shown on your Fiscal Year 2005 Annual Incentive Plan Statement.

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

Your individual target is the incentive you will earn when both the business unit and the Corporation achieve their goals. This means that your incentive opportunity based on business unit performance is 50% of the target or $3,000 and your incentive opportunity based on the Corporation’s performance is 50% of the target or $3,000 — for a total individual target opportunity of 10% or $6,000.

If your business unit’s performance is above or below goal, the amount calculated for the business unit component will be increased or decreased. The resulting amount is used as the basis for calculating your corporate incentive opportunity based on corporate earnings per share performance.

BUSINESS UNIT PERFORMANCE MULTIPLIER

At the beginning of the fiscal year, each business unit is given a performance multiplier. This multiplier is used to calculate the incentive when performance is above or below goal, after the performance threshold has been achieved. The business unit performance multiplier supports our compensation philosophy of linking compensation to performance that contributes to our business objectives.

The business unit performance multiplier — shown on your Fiscal Year 2005 Annual Incentive Plan Statement —incrementally increases your individual target incentive opportunity for business unit performance above goal. It also incrementally decreases your target incentive opportunity for business unit performance below goal. The increments are based on the percentage that actual earnings results are above or below the earnings goal. Of course, the performance threshold must be achieved for any incentive to be earned.

HOW THE MULTIPLIER IS USED

Once each business unit’s fiscal year earnings performance has been measured, the performance multiplier will be applied based on the actual performance achieved, and will be used to help calculate your incentive opportunity.

For example, assume your business unit is given a performance multiplier of 4 at the beginning of the year, and the unit’s final fiscal year-end earnings result is 110% of the earnings goal.

The business unit performance multiplier adjusts your individual incentive opportunity based on your business unit’s performance:

The illustration on page 5 shows the potential business unit incentive opportunity for a participant under the Plan. This illustration assumes a business unit performance multiplier of 4 and a performance threshold of 90% of goal.

In this example, if actual earnings results are 90% of goal, the business unit incentive opportunity will be 60% [100% — (4 x 10%)]. Therefore, the business unit incentive opportunity for this individual will be 60% of his or her target business unit incentive.

However, if actual earnings results are 110% of goal, the business unit incentive opportunity will be 140% [100% + (4 x 10%)].

HOW AWARDS ARE CALCULATED

At the end of American Greetings fiscal year, your business unit’s actual earnings results will be measured and your incentive opportunity will be calculated. If American Greetings achieves at least 90% of our corporate earnings

per share goal, your business unit incentive opportunity will be increased. Your actual incentive will then be determined based on your individual performance.

The following examples show how an actual incentive opportunity is calculated under different performance scenarios. It assumes a business unit multiplier of 4.

Nothing in this brochure should be construed to create or imply any contract of employment between an employee and American Greetings and its subsidiaries. No employee, former employee or any beneficiary shall have any right to payments under the American Greetings Key Management Annual Incentive Plan, except as specifically provided in the Plan.

American Greetings reserves the right to make changes to the Plan without prior notice to any of the Plan’s participants. The Chief Executive Officer and Chairman are the only people who have the authority to alter or amend this Plan as is relates to any one participant. Any such alteration or amendment must be done in writing. No participant should rely on an alteration, amendment or modification to this Plan unless it is made in writing and is signed by the CEO or the Chairman.

For purposes of illustrating how the Plan works, hypothetical associates, target incentives, performance outcomes and incentive payments have been used in this brochure. The actual incentive, if any, will be based on the actual performance of American Greetings, its business units, and your individual performance.

This brochure and its contents are considered to be confidential and proprietary, and are for the sole use of current American Greetings employees.