Units”) in combination with stock options in appropriate cases, and the HRCC awarded Stock Units in lieu of a certain percentage of the number of stock options otherwise to be awarded to certain officers at the level of Vice President or above. During fiscal 2006, no Stock Units were awarded to the Named Executives or other executive officers. To date, only non-qualified stock options and Stock Units have been granted under the 2001 Plan. As of June 1, 2006, 767,593 shares of Common Stock remained available for grant under the 2001 Plan.

     During fiscal 2006, 49 employees, including 10 executive officers (other than Mr. Robinson), received equity incentive awards, including non-qualified stock option awards to purchase 470,500 shares of Common Stock and awards of 1,000 Stock Units in aggregate. All of the non-qualified stock option awards in fiscal 2006 were made at the fair market value on the date of grant. The size of each senior management option was based on the HRCC’s subjective evaluation of a number of factors, including the level of responsibility of the individual, competitive market practice, past awards and other matters relating to the individual’s performance and ability to influence corporate results. The actual grants of stock options and Stock Units are made by the Stock Grant Committee of the Board, which is comprised solely of independent directors, each of whom is also a member of the HRCC. In fiscal 2006, Ms. Mayer was awarded non-qualified options to purchase 34,000 shares of Common Stock, which were scheduled to vest in four equal annual installments commencing on the first anniversary of the award date, as part of a three year program pursuant to which she has received a further grant in fiscal 2007 to purchase 33,000 shares of Common Stock and it is proposed that she will receive a similar grant to purchase 33,000 shares in fiscal 2008; Ms. Holton was awarded non-qualified options to purchase 50,000 shares of Common Stock, constituting the second portion of a commitment to award options covering 100,000 shares of Common Stock made in connection with her hiring, which were scheduled to vest in two equal annual installments commencing on the first anniversary of the award date; and Ms. Winston was awarded non-qualified options to purchase 25,000 shares of Common Stock, which were scheduled to vest in four equal annual installments commencing on the first anniversary of the award date. Effective May 30, 2006, the vesting of all of the options mentioned above, including those awarded to the Named Executives, was accelerated and such options became immediately exercisable, as further described below.

     Statement of Financial Accounting Standards No. 123 (Revised 2004), “Share-Based Payment” (“SFAS 123R”), became applicable to the Company on June 1, 2006. Under SFAS 123R, the Company is required to recognize the compensation cost related to share-based payment transactions, including stock options, in its financial statements. In anticipation of such implementation, in May 2006 the HRCC approved the acceleration of the vesting of all unvested stock options outstanding as of May 30, 2006 granted to all employees (including executive officers) and outside directors of the Company (the “Acceleration”) in order to mitigate compensation expense that the Company would have been required to recognize in its financial statements with respect to such options as a result of the implementation of SFAS 123R. As a result of the Acceleration, all such options, including the options granted to the

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Named Executives noted above, became fully vested and immediately exercisable. Except for the Acceleration, all other terms and conditions applicable to such stock options were unchanged. In its consideration of the Acceleration, the HRCC took into account the fact that a substantial number of the options affected were “underwater,” since the then-current market price for the Common Stock was less than the applicable exercise price. A majority of the options to purchase Common Stock that became fully vested due to the Acceleration were originally scheduled to vest in fiscal 2007.

     In addition to its stock incentive plans, the Company also maintains the Scholastic Corporation Employee Stock Purchase Plan (as amended, the “ESPP”) and the Scholastic Corporation Management Stock Purchase Plan (as amended, the “MSPP”). The ESPP and the MSPP were designed to augment the Company’s stock-based incentive programs by providing participating employees with equity opportunities intended to further align their interests with the Company and its stockholders. The purpose of the ESPP is to encourage broad-based employee stock ownership. The ESPP is offered to United States-based employees, including executive officers other than Mr. Robinson. The ESPP, as amended, effective for the fiscal quarter commencing on June 1, 2006, permits participating employees to purchase, through after-tax payroll deductions, Common Stock at a 15% discount from the closing price of the Common Stock on the last business day of each fiscal quarter. Prior to this amendment, the 15% discount under the ESPP was applied to the lower of the closing price of the Common Stock on the first or the last day of each fiscal quarter; this “lookback” feature to the first day of the fiscal quarter was removed in order to mitigate the compensation expense that the Company would have been required to recognize in its financial statements with respect to Common Stock purchased under the ESPP as a result of SFAS 123R.

     Under the MSPP, eligible members of senior management may use their annual cash bonus payments on a tax-deferred basis to make equity investments in the Company at a discounted purchase price. With respect to fiscal 2006, senior management participants were permitted to defer receipt of all or a portion of their annual cash bonus payments, which will be used to acquire Restricted Stock Units (“RSUs”) at a 25% discount from the lowest closing price of the underlying Common Stock during the fiscal quarter ending on August 31, 2006. The deferral period chosen by the participants may not be less than the three year vesting period for the RSUs, which are converted into shares of Common Stock on a 1-to-1 basis upon expiration of the deferral period. During fiscal 2006, twelve members of senior management had elected to participate in the MSPP. As a result of the award of bonuses to Ms. Holton, Ms. Forte, Ms. Mayer and Ms. Winston in respect of fiscal 2006, $15,060 (20% of bonus), $16,250 (25% of bonus), $13,500 (20% of bonus) and $18,800 (50% of bonus), respectively, will be allocated by them to the purchase of RSUs under the MSPP on September 1, 2006.

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Compensation of Chief Executive Officer

     The compensation of Mr. Robinson, who is both the Chief Executive Officer and the controlling stockholder of the Company, is based on the same objectives and policies applicable to all members of senior management and includes base salary, bonus opportunities and stock option grants. Effective October 1, 2005, Mr. Robinson’s base salary, which had not been increased during fiscal 2005, was increased by 3%, from $845,000 to $870,000. Mr. Robinson’s bonus opportunity percentage was 100% of his base salary in each of fiscal 2006, fiscal 2005 and fiscal 2004. In determining Mr. Robinson’s base compensation and bonus opportunity, the HRCC considered the compensation of the chief executive officers of a broad group of companies in the publishing and media industries, including the companies comprising the “Peer Group” used in the Stock Performance Graph in this proxy statement, as well as the Company’s financial performance and Mr. Robinson’s individual performance. Since the Company did not meet the corporate targets under the EPIP for fiscal 2006, no bonus was awarded to Mr. Robinson for fiscal 2006.

     In fiscal 2005, the HRCC had concluded that Mr. Robinson’s long-term incentive compensation opportunities had been significantly below those made available to the chief executive officers of other companies in the publishing and media industries reviewed by the HRCC. As a result of its review of this issue, taking into account Mr. Robinson’s overall compensation, the HRCC adopted the Scholastic Corporation 2004 Class A Stock Incentive Plan (the “Class A Plan”), which was designed to enable the HRCC and the Stock Grant Committee to grant options to Mr. Robinson to acquire Class A Stock of the Company and was approved by the holders of the Class A Stock of the Company at the 2004 Annual Meeting of Stockholders. The HRCC concluded that the Class A Plan was in the best interests of the Company and its stockholders since options granted thereunder would, in its opinion, be a significant motivating factor for Mr. Robinson and would also reflect Mr. Robinson’s stated intention to treat any long-term incentive compensation opportunities provided to him under the Class A Plan as a long-term investment in the Company. In each of September 2004 and September 2005, the Stock Grant Committee, on the recommendation of the HRCC, granted Mr. Robinson options to purchase 333,000 shares of Class A Stock at an exercise price of $29.49 per share and $36.41 per share, respectively, the exercise price being determined by reference to the trading price of the Common Stock on the respective grant dates. Based on advice from independent consultants retained by the HRCC, it was determined by the HRCC that the fair market value of a share of Class A Stock was identical to that of a share of Common Stock. The foregoing option grants are part of a proposed long-term incentive compensation program for Mr. Robinson which, subject to annual review by the HRCC, is intended to involve the grant of options to purchase 333,000 shares of Class A Stock in each of the calendar years 2004, 2005 and 2006 and of options to purchase 250,000 shares of Class A Stock in each of 2007 and 2008, both as a “catch up” in respect of the level of long-term incentive compensation opportunities provided Mr. Robinson in the past and as an ongoing program based on Mr. Robinson’s continuing performance as the Chief Executive Officer of

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the Company. Accordingly, the HRCC determined that each proposed annual grant under the program described above would be subject to review by the HRCC for the purposes of providing an annual recommendation for implementation to the Stock Grant Committee based on all factors deemed relevant by the HRCC. Effective May 30, 2006, the vesting of all of the outstanding Class A Options was accelerated and such options became immediately exercisable, as described above.

Policy as to Section 162(m) of the Code

     Section 162(m) of the Code generally denies a publicly traded company a Federal income tax deduction for compensation in excess of $1 million paid to certain of its executive officers, unless the amount of such excess is payable based solely upon the attainment of objective performance criteria. The Company has undertaken to qualify substantial components of the incentive compensation it makes available to its executive officers for the performance exception to nondeductibility. Most equity-based awards available for grant under the Company’s equity compensation plans, and all of the equity-based awards actually granted to executive officers, are intended to so qualify. Amounts payable under the EPIP are also intended to be exempt from the application of Section 162(m) as performance-based compensation. However, in appropriate circumstances, the HRCC may deem it appropriate to pay compensation or make incentive or retentive awards that do not meet the performance based criteria and therefore may not be deductible by reason of Section 162(m).

	Human Resources and Compensation
	Committee
	John L. Davies (Chairperson)
	Ramon C. Cortines
	Charles T. Harris III
	Peter M. Mayer
	John G. McDonald

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Stock Price Performance Graph

     The graph below provides an indicator of cumulative total stockholder returns for the Common Stock for the period June 1, 2001 to May 31, 2006 compared with the NASDAQ Composite Index and a composite peer group of publicly traded companies with which the Company competes in its principal operating segments. The members of the peer group are: The McGraw Hill Companies, Reader’s Digest Association, Inc., John Wiley and Sons, Inc. and Pearson plc. The graph assumes a $100 investment on June 1, 2001, together with the reinvestment of all dividends, if any.

		6/01/01		5/31/02		5/31/03		5/31/04		5/31/05		5/31/06
SCHOLASTIC CORPORATION		100.00		119.12		77.92		70.69		93.92		65.88
NASDAQ STOCK MARKET		100.00		79.21		79.09		98.06		102.31		108.54
PEER GROUP		100.00		83.84		74.69		96.32		106.06		121.92

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MATTERS SUBMITTED TO STOCKHOLDERS

PROPOSAL 1 — ELECTION OF DIRECTORS

     The Amended and Restated Certificate of Incorporation of the Company provides that the holders of shares of Class A Stock, voting as a class, have the right to fix the size of the Board so long as it does not consist of less than three nor more than fifteen directors. The current Board consists of eleven directors. Charles T. Harris III, a director of the Company since 1996, notified the Board at its July meeting of his decision not to stand for re-election at the Annual Meeting because of increased time commitments in connection with his activities in the not-for-profit sector. As a result, in July 2006, the Class A Stockholders executed a unanimous written consent fixing the size of the Board at ten directors, effective as of the Annual Meeting.

     The Board has designated the ten persons listed below under the sections captioned “Nominees for Election by Holders of Class A Stock” and “Nominees for Election by Holders of Common Stock” for nomination to serve as directors of the Company until the next annual meeting and until their respective successors are elected and qualified, or until their earlier retirement, resignation or removal.

     Proxies are solicited in favor of the eight nominees to be elected by the holders of Class A Stock and the two nominees to be elected by the holders of Common Stock, and it is intended that the proxies will be voted for such nominees unless otherwise specified. Should any one or more of the nominees become unable to serve for any reason, unless the holders of the Class A Stock provide for a lesser number of directors, the persons named in the enclosed proxy may act with discretionary authority in respect of the election of a substitute nominee or nominees. The Board has no reason to believe that any nominees will be unable to serve.

Recommendation

     The Board recommends that holders of Class A Stock vote FOR each of the eight nominees for election by such holders. Assuming the presence of a quorum, the affirmative vote of a plurality of the votes cast by the holders of shares of Class A Stock present and entitled to vote on this item at the Annual Meeting is required to elect each of the nominees.

     The Board recommends that holders of Common Stock vote FOR each of the two nominees for election by such holders. Assuming the presence of a quorum, the affirmative vote of a plurality of the votes cast by the holders of shares of Common Stock present and entitled to vote on this item at the Annual Meeting is required to elect each of the nominees.

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Nominees for Election by Holders of Class A Stock

						Director
Name		Principal Occupation or Employment		Age		Since*
Richard Robinson		Chairman of the Board, President, and Chief		69		1971
		Executive Officer of the Company
Rebeca M. Barrera		Founder, Tres Rebecas		59		1995
		San Antonio, TX
Ramon C. Cortines		Education Consultant, Pasadena, CA		74		1995
Andrew S. Hedden		Partner, Baker & McKenzie LLP, New York, NY		65		1991
Mae C. Jemison		President and Founder, BioSentient Corporation,		49		1993
		Houston, TX
Peter M. Mayer		President, The Overlook Press/Peter Mayer		70		1999
		Publishers, Inc., New York, NY
Augustus K. Oliver		Managing Member, Oliver Press Partners, LLC,		56		1995
		New York, NY
Richard M. Spaulding		Current employee and former Executive		69		1974
		Vice President of the Company
Nominees for Election by Holders of Common Stock
						Director
Name		Principal Occupation or Employment		Age		Since*
John L. Davies		Private Investor, Washington D.C.		56		2000
John G. McDonald		The Stanford Investors Professor of Finance,		69		1985
		Graduate School of Business, Stanford University,
		Stanford, CA

*	The dates set forth above indicate the date such director was elected as a director of the Company or its predecessor entity.

     Richard Robinson. Mr. Robinson has served as Chairman of the Board of the Company and/or Scholastic Inc. since 1982, as Chief Executive Officer since 1975 and as President since 1974. He has held various executive management and editorial positions with the Company since joining in 1962.

     Rebeca M. Barrera. Ms. Barrera is a national leader in Latino children’s education. She is an author, curriculum designer, national speaker and founder of the National Latino Children’s Institute. She also is the founder of Tres Rebecas, which provides consulting, design and development services throughout the United States.

     Ramon C. Cortines. Mr. Cortines is an Education Consultant and was the Executive Director of the Pew Network for Standards-Based Reform at Stanford University from 1996 through 2001. Since 1956, Mr. Cortines has served six school districts, including as

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Superintendent of Schools for Pasadena (11 years), San Jose (2 years), New York City (2 years), San Francisco (6 years) and Los Angeles (6 months).

     Andrew S. Hedden. Mr. Hedden is a partner of the law firm of Baker & McKenzie LLP, having previously been a partner with the law firm of Coudert Brothers LLP from 1975 to 2005.

     Mae C. Jemison. Dr. Jemison is the president of BioSentient Corporation, a medical technology company she founded in 2001 that develops and markets ambulatory equipment to monitor the autonomic nervous system and to train people to respond favorably in stressful situations. She is also the President of The Jemison Group, a technology consulting company that focuses on the integration of science and technology into everyday life and social responsibility. Dr. Jemison was a professor of Environmental Studies at Dartmouth College from 1996-2002. She served as a National Aeronautics and Space Administration (NASA) astronaut from 1987 to 1993 and was a member of the Space Shuttle Endeavour Flight in September 1992. She is also a director and member of the audit committees of Kimberly-Clark Corporation and Valspar Corporation, a director of Gen-Probe, Inc. and a member of the National Academy of Sciences Institute of Medicine.

     Augustus K. Oliver. Mr. Oliver has been a Managing Member of Oliver Press Partners LLC, an investment advisor, since 2005. Mr. Oliver also has been a Senior Managing Director of WaterView Advisors LLC, a private equity investment firm, since 1999. Mr. Oliver is the grandson of a former Chairman of the Board of Directors of Scholastic Inc.

     Richard M. Spaulding. Mr. Spaulding has held various executive management positions with the Company since joining in 1960, and served as Executive Vice President of the Company and/or Scholastic Inc. from 1974 to 2004.

     John L. Davies. Mr. Davies is a private investor. In addition, he serves as a special advisor to General Atlantic Partners, a private equity investment firm. Mr. Davies retired from AOL in 2002, which he had joined in 1993 as Senior Vice President. In 1994, he founded AOL International, where he served as President until becoming Senior Advisor in 2000.

     Peter M. Mayer. Mr. Mayer has been President of The Overlook Press/Peter Mayer Publishers, Inc. since 1997. Since 2003, Mr. Mayer has also been the President of Duckworth Publishers in the United Kingdom. From 1978 to 1996, he was Chairman of the Board and Chief Executive Officer of the Penguin Group Companies, overseeing its operations in the United States, the United Kingdom, Canada, Australia, New Zealand, Holland and India. From 1976 to 1978, he was President and Publisher of Pocket Books. He has also served as Editor-in-Chief, Publisher and President of Avon Books.

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     John G. McDonald. Professor McDonald joined the faculty of Stanford University Graduate School of Business, where he is The Stanford Investors Professor of Finance, in 1968. Professor McDonald serves on the Boards of Directors of Varian, Inc., Plum Creek Timber Co., iStar Financial, Inc. and eight mutual funds managed by Capital Research and Management Co.

Meetings of the Board and its Committees

     Five regular meetings and one special meeting of the Board were held during the 2006 fiscal year. All incumbent directors attended 75% or more of the aggregate of such meetings and of the meetings held during the 2006 fiscal year by all standing committees of the Board of which they were a member.

     The Board has seven standing committees—Audit; Executive; Human Resources and Compensation; Stock Grant; Nominating and Governance; Retirement; and Strategic Planning. All members of the Audit, Human Resources and Compensation, Stock Grant and Nominating and Governance Committees are independent directors and all Committee members are appointed by the Board on an annual basis. Each committee operates under a written charter establishing its roles and responsibilities, which can be found in the Investor Relations section of the Company’s website, www.scholastic.com. The duties and responsibilities of all the Board committees are reviewed regularly and are outlined below.

     Executive Committee. Richard Robinson (Chairperson), Charles T. Harris III, Peter M. Mayer, Augustus K. Oliver and Richard M. Spaulding are the current members of the Executive Committee. In the intervals between meetings of the Board, the Executive Committee is authorized to exercise, with certain exceptions, all of the powers of the Board in the management of the business and affairs of the Company. All actions taken by the Executive Committee are submitted for ratification by the Board. No meetings of the Executive Committee were held during the fiscal year ended May 31, 2006.

     Audit Committee. Augustus K. Oliver (Chairperson), John L. Davies and Charles T. Harris III are the current members of the Audit Committee. Each member of the Audit Committee is independent, as defined under NASDAQ listing standards and applicable SEC regulations. The Board has determined that all Audit Committee members are “financially literate,” as defined under NASDAQ listing standards, and that, based upon their business experience, Messrs. Harris and Oliver qualify as “financial experts,” as defined in SEC regulations. Mr. Oliver is the designated financial expert. This committee reviews the corporate accounting and financial reporting practices of the Company, including its disclosure and internal controls, and the quality and integrity of the financial reports of the Company, including a review of the Company’s Quarterly Reports on Form 10-Q and Annual Report on Form 10-K. This committee appoints the Company’s independent auditors and pre-approves

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any non-audit services to be provided by such auditors, as further described in this proxy statement under “Independent Registered Public Accountants.” The Audit Committee discusses with the Company’s internal and independent auditors the overall scope and plans for their respective audits. The Audit Committee meets with both the internal and independent auditors, with and without management present, to discuss the results of their examinations, their evaluations of the Company’s disclosure and internal controls and the overall quality of the Company’s financial reporting. The Audit Committee approves all “related party transactions,” as defined in SEC regulations. The Audit Committee held nine meetings during the fiscal year ended May 31, 2006. Four of the meetings were held for the purpose of reviewing and discussing the Company’s Quarterly Reports on Form 10-Q and Annual Report on Form 10-K. A copy of the Audit Committee charter is attached to this proxy statement as Appendix A.

     Retirement Plan Committee. Richard M. Spaulding (Chairperson), Charles T. Harris III, Andrew S. Hedden and Augustus K. Oliver are the current members of the Retirement Plan Committee. This committee acts on behalf of the Board in its capacity as settlor of the trusts underlying the Retirement Plan and the 401(k) Plan (collectively “the Plans”) and with respect to the powers enumerated therein, including the power to amend or terminate the Plans. This committee also oversees the Administrative Committee, comprised of Company employees who are responsible for the day-today administration of the Plans. In addition, this committee approves the appointment of one or more trustees, or other professionals, necessary for the proper administration and operation of the Plans. Furthermore, this committee, which reports its actions to the Board, oversees the policies and practices related to the Plans and evaluates the Company’s overall retirement benefit plan philosophy and the Plans in the context of the Company as a separate company and competitively within the publishing industry, as well as the investment performance under the Plans. The Retirement Plan Committee held one meeting during the fiscal year ended May 31, 2006.

     Human Resources and Compensation Committee. John L. Davies (Chairperson), Ramon C. Cortines, Charles T. Harris III, Peter M. Mayer and John G. McDonald are the current members of the Human Resources and Compensation Committee. This committee has the responsibility for setting the compensation of the Chief Executive Officer and reviewing the recommendations of the Chief Executive Officer for compensation of the other executive officers and members of senior management prior to approval by the Board. This committee evaluates the Company’s overall compensation plans and practices as a separate company and competitively within the industry. This committee, in overseeing the administration of all of the Company’s compensation plans and arrangements, reviews and approves the annual bonus award target payouts (including awards under the EPIP) and any proposed contractual relationships with executive officers and also reviews the Company’s recruitment practices, including the Company’s diversity programs. Each member of the committee is independent, as defined under NASDAQ listing standards. Members of this committee must also meet certain additional criteria so that the Company qualifies for available exemptions pursuant to

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Section 162(m) of the Code and Rule 16b-3 under the Exchange Act. The Human Resources and Compensation Committee held five meetings during the fiscal year ended May 31, 2006.

     Nominating and Governance Committee. Ramon C. Cortines (Chairperson), Rebeca M. Barrera, Charles T. Harris III and Mae C. Jemison are the current members of the Nominating and Governance Committee. Each member of the committee is independent, as defined under NASDAQ listing standards. This committee identifies and recommends to the Board candidates for election as directors and recommends any changes it believes desirable in the size and composition of the Board as well as Board committee structure and membership. This committee also administers Scholastic’s Corporate Governance Guidelines, reviews performance under, and compliance with, the guidelines and the content of the guidelines annually and, when appropriate, recommends updates and revisions of the guidelines to the Board. In addition, this committee oversees the Board self-assessment process. The Nominating and Governance Committee held four meetings during the fiscal year ended May 31, 2006.

     Stock Grant Committee. John G. McDonald (Chairman), John L. Davies, Charles T. Harris III and Peter M. Mayer are the current standing members of the Stock Grant Committee and, as permitted under Delaware law, Ramon C. Cortines is an alternate member of the Stock Grant Committee. Each member (and alternate member) of the committee is independent, as defined under NASDAQ listing standards. Members of this committee must also meet certain additional criteria so that the Company qualifies for available exemptions pursuant to Section 162(m) of the Code and Rule 16b-3 under the Exchange Act. This committee authorizes and approves grants, awards or issuances of options, warrants, restricted stock or other rights under the Company’s stock-based compensation plans. This committee held five meetings during the fiscal year ended May 31, 2006.

     Strategic Planning Committee. Mae C. Jemison (Chairperson), Rebeca M. Barrera, Ramon C. Cortines, Peter M. Mayer and Richard M. Spaulding are the current members of the Strategic Planning Committee. This committee advises the Company’s management on achieving and implementing its strategic plan and reports its findings to the Board. No meetings of this committee were held during the fiscal year ended May 31, 2006.

Corporate Governance

     In recent years, the Board has strengthened the Company’s corporate governance practices in a number of ways, including adopting the Scholastic Corporation Corporate Governance Guidelines, which are summarized below. The full text of the Company’s Corporate Governance Guidelines is available in the Investor Relations section of the Company’s website, www.scholastic.com. Stockholders may also obtain a written copy of the Guidelines at no cost by writing to the Company at Scholastic Corporation, 557 Broadway,

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New York, NY 10012, Attention: Corporate Secretary. In addition to the Guidelines, the Board believes that the Scholastic Code of Ethics and the Code of Ethics for Senior Financial Officers, described below, as well as the Committee Charters, which have all been approved by the Board, are vital to securing the confidence of Scholastic’s shareholders, customers, employees, governmental authorities and the investment community.

     Independent Directors. Scholastic’s Corporate Governance Guidelines provide for a board of ten to fifteen directors and require a majority of independent directors. The Nominating and Governance Committee is responsible for reviewing with the Board annually the appropriate criteria and standards for determining director independence consistent with applicable legal requirements, including NASDAQ listing standards and the federal securities laws. The Board has determined that all of its current directors are independent, as defined in the NASDAQ listing standards, other than Mr. Robinson, Mr. Spaulding and Mr. Hedden. Mr. Robinson is an executive officer and Mr. Spaulding is an employee and former executive officer of the Company. Mr. Hedden is not considered independent because he is a partner in a law firm that currently provides legal services to the Company.

     Communication With the Board. Individuals may submit communications to the Board, or to the non-management directors individually or as a group, by sending the communications in writing to the attention of the Corporate Secretary of the Company at Scholastic Corporation, 557 Broadway, New York, NY 10012. All communications that relate to matters that are within the scope of responsibilities of the Board and its Committees will be forwarded to the appropriate directors by the Corporate Secretary.

     Director Nomination Process. The Nominating and Governance Committee periodically reviews with the Board the requisite skills and characteristics of new directors, if any, as well as the composition of the Board as a whole. The Nominating and Governance Committee makes an assessment of the suitability of candidates for election to the Board, taking into account diversity, independence, character, judgment and business experience, as well as their appreciation of the Company’s purpose, values and credo. The Committee, at this time, does not believe it is necessary or appropriate to adopt specific, minimum objective criteria for director nominees. Stockholders may propose nominees for Board membership for consideration by the Nominating and Governance Committee by submitting the nominee’s name, biographical data and qualifications along with the consent of the proposed nominee to the Nominating and Governance Committee, Attention: Corporate Secretary at Scholastic Corporation, 557 Broadway, New York, NY 10012. Stockholders who wish to nominate candidates for election to the Board at the next annual meeting of stockholders must adhere to the dates and follow the procedures outlined in “Stockholder Proposals for 2007 Annual Meeting” set forth below. The Nominating and Governance Committee will consider all director candidates properly submitted by stockholders in accordance with the Company’s Bylaws and Corporate Governance Guidelines using the same criteria that it uses to select directors for non-stockholder nominees. From time to time, the Company has retained an

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independent search firm in order to assist the committee in its selection process with respect to candidates for Board membership by identifying potential candidates and assisting the committee in its evaluation of such candidates.

     Board Meetings and Executive Sessions. Directors are expected to expend sufficient time, energy and attention to assure diligent performance of their responsibilities. Directors are expected to attend meetings of the Board and the Committees on which they serve, whether in person or by telephone. Management provides all directors with an agenda and appropriate written materials in advance of each meeting. To ensure active and effective participation, directors are expected to arrive at each Board and committee meeting having reviewed the materials for the meeting. The Board regularly meets in executive session with only the independent directors present.

     Director Attendance at Company Annual Meetings. All directors are encouraged to attend the Company’s annual meetings of stockholders. All of the Company’s directors attended the annual meeting of stockholders held on September 21, 2005.

     Annual Self-Assessment. The Board and each director make an annual self-assessment of performance with a particular focus on overall effectiveness. The Nominating and Governance Committee is responsible for overseeing the self-assessment process.

     Access to Management and Advisors. Directors have access to the Company’s management and, in addition, are encouraged to visit the Company’s facilities. As necessary and appropriate, the Board and its Committees may retain outside legal, financial or other advisors.

     Investment Expectations of Directors. Directors are encouraged to own Company stock in an amount that is appropriate for them.

     Scholastic Code of Ethics and Code of Ethics for Senior Financial Officers. The Company has implemented a Code of Ethics applicable to its employees and directors generally and a Code of Ethics for Senior Financial Officers. The Scholastic Code of Ethics operates as a tool to help Scholastic’s employees and directors understand and adhere to high ethical standards required for employment by, or association with, the Company. The Scholastic Code of Ethics contains procedures for employees to report to the Audit Committee any concerns with regard to any questionable accounting, internal control or auditing matters. The Code of Ethics for Senior Financial Officers provides fundamental ethical principles to which the Company’s Chief Executive Officer, Chief Financial Officer and Controller are expected to adhere. Both the Scholastic Code of Ethics and the Code of Ethics for Senior Financial Officers are available in the Investor Relations section of the Company’s website, www.scholastic.com. Additionally, these documents are available in print to any stockholder requesting a copy.

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Director Compensation

     For the fiscal year ended May 31, 2006, each non-employee director of the Company (an “Outside Director”) was paid a cash annual retainer of $25,000 for his or her services as a director, a fee of $5,000 if he or she was the chairperson of a standing Board Committee, except in the case of the chairperson of the Audit Committee, who received a $10,000 fee, and an attendance fee of $1,500 for attendance at each Board or Committee meeting, whether in person or telephonically. The Company reimburses directors for travel, lodging and related expenses they may incur in connection with their services as directors.

     Under the terms of the Scholastic Corporation 1997 Outside Directors’ Stock Option Plan, an option to purchase 6,000 shares of Common Stock at a purchase price per share equal to the fair market value of a share of Common Stock on the date of grant is automatically granted to each Outside Director on the date of the annual meeting of stockholders. As a result, in fiscal 2006 each Outside Director (other than Andrew S. Hedden, who, as he has done each year, declined his award in fiscal 2006) was granted options to purchase 6,000 shares of Common Stock on September 21, 2005, at an exercise price of $36.41 per share. The options, which were scheduled to vest one year from the date of grant, but which became immediately exercisable as a result of the Acceleration on May 30, 2006, expire on September 21, 2015.

     Under the terms of the Scholastic Corporation Directors’ Deferred Compensation Plan, directors are permitted to defer 50% or 100% of their cash retainers and meeting fees. Deferred amounts accrue interest at a rate that extrapolates a 30-year United States Treasury bill rate and are paid in cash upon the later of termination from Board service or the end of the deferral period, unless paid earlier due to death, disability, change of control of the Company or severe financial hardship. For the fiscal year ended May 31, 2006, two directors chose to defer 100% of their cash compensation under this plan. Interest expense accrued during fiscal 2006 on amounts deferred during fiscal 2006 and prior years under this plan was $42,271.

Certain Relationships

     Andrew S. Hedden is a partner of the law firm of Baker & McKenzie LLP, which has provided legal services to the Company in the past and is expected to continue to do so in the future. This relationship is periodically reviewed and the services approved by the Audit Committee of the Board.

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PROPOSAL 2 — APPROVAL OF AN AMENDMENT
TO THE COMPANY’S AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION

     On July 19, 2006, the Board unanimously approved an amendment (the “Charter Amendment”) to the Company’s Amended and Restated Certificate of Incorporation (the “Certificate”) to increase the number of authorized shares of Class A Stock from 2,500,000 shares to 4,000,000 shares, subject to the approval of the Class A Stockholders. The Board has recommended that the Charter Amendment, a copy of which is attached to this proxy statement as Appendix B, be submitted to the Class A Stockholders at the Annual Meeting.

     The following is a summary of the proposed amendment to the Certificate to be effected by the Charter Amendment.

     Under the terms of the Certificate, the Company is currently authorized to issue seventy four million five hundred thousand (74,500,000) shares of capital stock, consisting of seventy million (70,000,000) shares of Common Stock; two million five hundred thousand (2,500,000) shares of Class A Stock; and two million (2,000,000) shares of Preferred Stock. The Charter Amendment would increase the number of shares of Class A Stock from two million five hundred thousand (2,500,000) shares of Class A Stock to four million (4,000,000) shares of Class A Stock.

     Reasons for and Effects of the Increase of Authorized Class A Stock. Of the 2,500,000 shares of Class A Stock that are currently authorized by the Certificate, 1,656,200 shares of Class A Stock were outstanding and an additional 750,000 shares of Class A Stock were reserved for issuance under the Class A Plan as of the Record Date. Accordingly, at that date, the Company had 93,800 authorized shares of Class A Stock that were unreserved and available for issuance.

     As discussed in “The Human Resources and Compensation Committee’s Report on Executive Compensation” (the “HRCC Report”) appearing above in this proxy statement, the HRCC has adopted a long-term incentive compensation program for Richard Robinson, the Chief Executive Officer and controlling stockholder of the Company, which, subject to annual review by the HRCC, is intended to involve a grant over a five-year period of non-qualified options to purchase an aggregate of 1,499,000 shares of Class A Stock pursuant to the Class A Plan, of which options to purchase 666,000 shares have been granted to date. If the HRCC determines to implement the full program as intended, it would be necessary to increase the number of shares of Class A Stock authorized for issuance under the Certificate by 749,000 shares, as well as to increase the number of shares of Class A Stock available for the grant of options under the Class A Plan as discussed in Proposal 3 below. As indicated in the HRCC Report, the long-term incentive compensation program for Mr. Robinson referred to above is intended as both a “catch-up” in respect of the level of long term incentive compensation

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opportunities provided Mr. Robinson in the past and as an ongoing program based on Mr. Robinson’s continued performance as Chief Executive Officer of the Company.

     The Board is recommending an increase of 1,500,000 shares of authorized Class A Stock under the Certificate, of which 749,000 shares would be available under the Class A Plan in connection with Mr. Robinson’s long-term incentive compensation program and the balance of 751,000 shares would be available in the event additional Class A Stock was required for general corporate purposes. Except in connection with Mr. Robinson’s proposed compensation program, the Board has no current plans to issue any of the additional Class A Stock to be authorized by the Charter Amendment, but it believes that having the additional shares of Class A Sock available would provide flexibility in the event Class A Stock was ever required to be issued because of actions taken in respect of the Common Stock, such as a stock dividend or stock split. However, no additional action or authorization by the Company’s stockholders would be necessary prior to the issuance of such shares, unless required for the particular transaction by applicable law.

     The additional shares of Class A Stock to be authorized if the Charter Amendment is approved would be identical to the shares of Class A Stock now authorized and would not affect or change the rights of the holders of Class A Stock. Neither the holders of Class A Stock nor the holders of Common Stock have pre-emptive rights to purchase any shares of authorized capital stock of the Company. The issuance of additional shares of Class A Stock could have the effect of diluting the existing economic rights of the holders of Common Stock and the holders of Class A Stock. As provided in the Certificate, voting control of the Company will continue to rest with the holders of Class A Stock, except for the right of the holders of shares of Common Stock, voting as a class, to elect such minimum number of directors as shall equal at least one-fifth of the Board.

Recommendation

     The Board recommends that the holders of the Class A Stock vote FOR the approval of the Charter Amendment to increase the number of authorized shares of Class A Stock under the Certificate. Assuming the presence of a quorum, the affirmative vote of the holders of a majority of the outstanding shares of Class A Stock present and entitled to vote on this Proposal at the Annual Meeting is required to approve the Charter Amendment.

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PROPOSAL 3 — APPROVAL OF AN AMENDMENT TO
THE SCHOLASTIC CORPORATION
2004 CLASS A STOCK INCENTIVE PLAN

     The Scholastic Corporation 2004 Class A Stock Incentive Plan, which was initially approved by the holders of the Class A Stock at the annual meeting of the Company’s stockholders held on September 20, 2004, provides for the grant of options to purchase shares of Class A Stock to Mr. Robinson, the Company’s Chief Executive Officer and its controlling stockholder. On May 25, 2006, in connection with the Acceleration, the HRCC approved an amendment to the Class A Plan to remove the prohibition against the grant of options with an initial vesting date prior to the one year anniversary of the date of the grant. Such amendment did not require the approval of the Class A Stockholders. On July 18, 2006, the HRCC approved an additional amendment to the Class A Plan, subject to approval by the Class A Stockholders at the Annual Meeting, to increase the number of shares of Class A Stock that may be issued upon the exercise of options granted under the Class A Plan by 749,000 shares (the “Plan Amendment”). A copy of the Plan Amendment is attached to this proxy statement as Appendix C.

     The purpose of the Class A Plan is to enhance the profitability and value of the Company for the benefit of its stockholders by allowing the Company to offer options to Mr. Robinson in order to provide performance-based incentives in the form of increased ownership of Class A Stock based upon the future success of the Company, and in such context, to further strengthen the mutuality of interests between Mr. Robinson and the Company’s stockholders. The HRCC continues to believe that, based on its view that Mr. Robinson continues to be of critical importance to the Company and its future growth prospects, as well as the importance of the continued motivation of Mr. Robinson and the fact that no change in control of the Company would result from the use of Class A Stock for this purpose because Mr. Robinson is already the Company’s controlling stockholder through his ownership of outstanding Class A Stock, it is appropriate and in the best interests of the Company and its stockholders to provide long-term incentive opportunities to Mr. Robinson in the form of Class A Stock, recognizing that such opportunities will only be realized if the Company performs successfully in the future. As discussed in the HRCC report and Proposal 2 above, the HRCC has adopted a long-term incentive compensation program for Mr. Robinson involving the grant, subject to annual review, over a five year period of an aggregate of 1,499,000 Class A Options under the Class A Plan, of which 666,000 Class A Options have been granted to date.

     The purpose of the proposed increase is to enable the Company to implement the balance of the proposed long-term incentive compensation program for Mr. Robinson as described under Proposal 2 above, since 833,000 shares of Class A Stock would be required to be available for issuance for such purpose, but only 84,000 shares of Class A Stock currently remain available for issuance under the Class A Plan.

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     The Class A Plan provides for the grant of options to purchase shares of Class A Stock. The Class A Stock is convertible into Common Stock on a share-for-share basis, as provided in the Company’s Certificate. The Stock Grant Committee of the Board, which is comprised of two or more non-employee directors, each of whom is, to the extent required by Rule 16b-3 under the Exchange Act and Section 162(m) of the Code, a non-employee director as defined in Rule 16b-3 and an outside director under Section 162(m), determines the number of shares of Class A Stock subject to each such option, as well as the term (which may not exceed 10 years), the exercise price, the vesting schedule and the other material terms of each Class A Option. The exercise price per share of Class A Stock subject to any option may not be less than 100% of the fair market value of the Class A Stock on the date the option is granted. Fair market value is to be determined in good faith by the Stock Grant Committee based on all facts and circumstances, including by reference to the sales price of the Common Stock underlying the Class A Stock as reported by NASDAQ or other quotation system or exchange on which the Common Stock may be traded.

     Only Mr. Robinson, the Company’s Chief Executive Officer as of the effective date of the Class A Plan, is eligible to be granted Class A Options. Awards under the Class A Plan may not be made on or after July 28, 2014, the tenth anniversary of the date the Class A Plan was adopted by the HRCC, but awards granted prior to such date may extend beyond that date.

     Class A Options are exercisable at such time or times and subject to such terms and conditions as determined by the HRCC, which administers the Class A Plan, and the Stock Grant Committee, which makes the actual award of the grant of Class A Options. Class A Options may be exercised either (1) by payment in full of the purchase price in cash, or (2) on such other terms and conditions as may be acceptable to the HRCC, including payment in full or part by surrender of then-owned shares of Common Stock or Class A Stock.

     The Class A Plan authorizes the HRCC, if deemed appropriate in its discretion, to permit “reloads” of Class A Options exercised, whereby an equivalent number of stock options would be granted upon exercise of an option as the number of shares, if any, used to pay for the exercise price of such options or to pay withholding taxes. Unless otherwise determined by the HRCC, any such reload options would have an exercise price equal to the fair market value of the Class A Stock on the date of the “reload” and a term equal to the remaining term of the options exercised.

     In the event of Mr. Robinson’s termination of employment in any of the circumstances described below, outstanding options granted under the Class A Plan will generally be treated as follows:

(a)	In the event of Mr. Robinson’s death or disability, all outstanding options will become immediately exercisable and Mr. Robinson or his estate will have one year (or, if shorter, until the end of the option term) to exercise such options;

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(b)	In the event of Mr. Robinson’s retirement, he will have three years (or, if shorter, until the end of the option term) to exercise options that are exercisable at the time of retirement;
(c)	In the event of Mr. Robinson’s involuntary termination without cause, he may exercise all options exercisable at the time of termination within 90 days from the date of termination (or, if shorter, until the end of the option term); or
(d)	In the event of Mr. Robinson’s termination for cause, or voluntary termination without cause, all options will terminate immediately with such termination of employment.

     The HRCC may, in its discretion, extend or accelerate the exercisability of an award granted under the Class A Plan, accelerate the vesting of, or eliminate or make less restrictive any restrictions contained in, any grant, waive any restriction or other provision of the Class A Plan or of any award or otherwise amend or modify any award in any manner that is not adverse to Mr. Robinson or that is consented to by Mr. Robinson, and that is not a “material amendment” to the plan or award requiring stockholder approval under applicable NASDAQ regulations.

     The HRCC may make appropriate adjustments to the number of shares available for awards and the terms of outstanding awards under the Class A Plan to reflect any change in the Company’s capital structure or business by reason of any stock dividend, stock split, recapitalization, reorganization, merger, consolidation, sale of all or substantially all the assets of the Company or similar event.

     The Class A Plan provides that it may be amended, in whole or in part, suspended or terminated by the Board or the HRCC, except that no such amendment, suspension or termination may change the classification of employees eligible to receive awards or effect an amendment that requires stockholder approval under applicable NASDAQ regulations unless such amendment receives stockholder approval, and no such amendment, suspension or termination may increase the aggregate number of shares of Class A Stock reserved for awards or the maximum individual share limits, decrease the minimum exercise price of any option, extend the maximum option period or otherwise effect an amendment that would require stockholder approval under Section 162(m) of the Code, unless such amendment receives stockholder approval to the extent required by Section 162(m) of the Code or Rule 16b-3 under the Exchange Act. The Plan Amendment requires the approval of the Class A Stockholders because it would increase the aggregate number of shares of Class A Stock reserved for awards under the Class A Plan.

     Although awards will generally be nontransferable (except by will or the laws of descent and distribution), the HRCC may determine at the time of grant or thereafter that a Class A Option that is otherwise nontransferable will be transferable in whole or in part to

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family members (as defined in the Class A Plan) and may specify the circumstances and conditions upon which such option may be transferred.

     The Class A Options to be granted under the Class A Plan are non-qualified stock options for federal income tax purposes. In general, Mr. Robinson will recognize no taxable income at the time of grant. Upon exercise, Mr. Robinson will recognize ordinary income equal to the difference between the exercise price and the fair market value of the shares of Class A Stock on the date of exercise. He will recognize as capital gain or loss any profit or loss realized on the subsequent sale or exchange of any shares disposed of or sold. The Company will be entitled to deduct from any taxes it owes in the year of exercise an amount equal to the difference between the exercise price and the fair market value of the shares of Class A Stock on the exercise date.

     In each of September 2004 and September 2005, the Stock Grant Committee, on the recommendation of the HRCC, granted Mr. Robinson options to purchase 333,000 shares of Class A Stock at an exercise price of $29.49 per share and $36.41 per share, respectively, with such exercise price, in each case, being determined by reference to the trading price of the Common Stock on the respective grant dates. Thus, as of the date of this proxy statement, Class A Options covering 666,000 shares of Class A Stock have been granted to Mr. Robinson under the Class A Plan. Additional benefits that may accrue to Mr. Robinson under the Class A Plan in the future cannot be predicted because option grants thereunder are dependent upon future decisions to be made by the Stock Grant Committee in its sole discretion and will be based on future events that cannot be ascertained at this time. However, if the proposed long-term program for Mr. Robinson is fully implemented, Mr. Robinson would receive options to purchase an additional 833,000 shares of Class A Stock over a three year period at exercise prices based on 100% of the fair market value of the Class A Stock on the respective grant dates.

     Under the terms of the Class A Plan, 750,000 shares of Class A Stock were originally reserved for issuance, of which 84,000 shares remain available. The proposed Plan Amendment provides for an additional 749,000 shares of Class A Stock to be available for issuance under the Class A Plan, and therefore the total number of shares of Class A Stock that will be available for issuance under the Class A Plan if the Plan Amendment is approved will be 1,499,000.

     There is no trading market for the Class A Stock. On the Record Date, the closing price of a share of Common Stock, which underlies the Class A Stock, as reported by NASDAQ was $28.09.

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Recommendation

     The Board recommends that holders of the Class A Stock vote FOR the approval of the Plan Amendment. Assuming the presence of a quorum, the affirmative vote of a majority of the votes cast by the holders of shares of Class A Stock present and entitled to vote on this item at the Annual Meeting is required to approve the Plan Amendment.

Equity Compensation Plan Information

     The following table presents information regarding the Company’s equity compensation plans at May 31, 2006:

							Number of securities
							remaining available for
		Number of securities to			Weighted average		future issuance under equity
		be issued upon exercise			exercise price of		compensation plans
		of outstanding options,			outstanding options,		(excluding securities
		warrants and rights			warrants and rights		reflected in column (a))
Plan Category		(a)			(b)		(c)
Equity Compensation plans
approved by security holders
Common Stock			6,219,108		$29.95			1,314,547	(1)
Class A Stock			666,000		$32.95			84,000
Equity Compensation plans not
approved by security holders
Common Stock			—		—			—
Class A Stock			—		—			—
Total			6,885,108		$30.24			1,398,547

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(1)	Includes 274,186 shares of Common Stock under the ESPP; 272,398 shares of Common Stock under the MSPP; and 767,963 shares of Common Stock under the 2001 Plan, which may be issued pursuant to the exercise of stock options or as restricted stock or other stock- based awards.

INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS

     The Audit Committee has appointed Ernst & Young LLP (“E&Y”) to be the independent auditors of the Company for the fiscal year ending May 31, 2007. A representative of E&Y will be present at the Annual Meeting and will be afforded the opportunity to make a statement. Such representative will also be available to respond to appropriate questions.

     The aggregate fees billed by E&Y for professional services to the Company were $4,185,227 for fiscal 2006 and $3,601,463 for fiscal 2005. The total fees for services provided

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by E&Y to the Company during the fiscal years ended May 31, 2006 and May 31, 2005 are summarized in the table below:

		Fiscal 2006			Fiscal 2005
		$			$
Audit Fees		$	3,781,495		$	3,346,186
Audit-Related Fees		$	116,793		$	95,062
Tax Fees		$	286,939		$	160,215
All Other Fees		$	—		$	—
TOTAL FEES PAID		$	4,185,227		$	3,601,463

     Audit Fees include the financial statement audit, as well as the audit of the assertion by management of the effectiveness of the Company’s internal controls required by the Sarbanes-Oxley Act of 20002. Audit-Related Fees include fees for services such as benefit plan audits, accounting consultations and work related to business acquisitions and SEC Registration Statements. Tax Fees are for the preparation of tax returns for certain international operations and consulting on tax planning opportunities and entity restructuring. In fiscal 2006 and fiscal 2005, in accordance with Section 10A(i) of the Exchange Act, the Audit Committee pre-approved all of the Audit-Related services and Tax services provided by E&Y. The Audit Committee’s non-audit services pre-approval policies require the receipt and analysis of a summary containing a description of the non-audit service to be provided prior to commencement of the engagement. The Committee then makes an evaluation as to whether the provision of the proposed non-audit service by E&Y will affect its independence and also considers the percentage of non-audit fees related to the total audit fees. If a non-audit service is required before the Audit Committee’s next scheduled meeting, the Committee has delegated to its chair, Mr. Oliver, the authority to approve such service on its behalf, provided that such action is reported to the Committee at its next meeting.

AUDIT COMMITTEE’S REPORT

     The Audit Committee has reviewed and discussed the audited consolidated financial statements of the Company for the fiscal year ended May 31, 2006 with the Company’s management. The Committee has discussed with E&Y, the Company’s independent accountants, the matters required to be discussed by Statement on Auditing Standards No. 61 (Communication with Audit Committees), as modified or supplemented.

     The Committee has also received the written disclosures and the letter from E&Y required by Independence Standards Board Standard No. 1 (Independence Discussion with Audit Committees) and the Committee has discussed the independence of E&Y with that firm.

     Based on the Committee’s review and discussions noted above, the Committee unanimously recommended to the Board (and the Board has approved) that the Company’s

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audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2006 for filing with the SEC.

	Audit Committee
	Augustus K. Oliver, Chairperson
	John L. Davies
	Charles T. Harris III

STOCKHOLDER PROPOSALS FOR 2007 ANNUAL MEETING

     Stockholders who intend to present proposals for inclusion in the proxy materials regarding the Company’s annual meeting of stockholders to be held in 2007 (the “2007 Annual Meeting”) must ensure that such proposals are received by the Secretary of the Company not later than April 23, 2007 and that such proposals meet the other requirements contained in SEC Rule 14a-8. In order for a proposal submitted outside of Rule 14a-8 to be considered “timely” within the meaning of SEC Rule 14a-4(c) for consideration at the 2007 Annual Meeting, but not included in the Company’s proxy materials, such proposal must be received no later than July 7, 2007.

OTHER MATTERS

     The Board is not aware of any other matters to come before the Annual Meeting. If any other matter should properly come before the Annual Meeting, the persons named in the enclosed proxy intend to vote the proxy according to their best judgment.

 

	By Order of the Board of Directors
	Paul Marcotrigiano
	Secretary

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Appendix A

CHARTER OF THE
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
OF SCHOLASTIC CORPORATION

I. Statement of Policy

     The Audit Committee’s primary objective is to provide assistance to the Board of Directors of Scholastic Corporation (the “Company”) in fulfilling its oversight responsibilities with respect to (a) the quality and integrity of the financial statements and other financial information provided to the stockholders of the Company, the financial and investment communities and the public, (b) the Company’s compliance with legal and regulatory requirements with regard to the Company’s financial statements (c) the independent auditors’ qualifications and independence, and (d) the performance of the Company’s internal audit function.

II. Organization

     The Audit Committee shall be comprised of no fewer than three (3) directors. Each member of the Audit Committee shall satisfy the independence, financial literacy and experience requirements of Section 10A of the Securities Exchange Act of 1934 (“the Act”) and the listing standards of The Nasdaq Stock Market, Inc. (“Nasdaq”) and any other applicable regulatory requirements. The Audit Committee shall contain at least one member who is a “financial expert” as such is defined in the Act. The members of the Audit Committee shall be appointed by the Board. The Audit Committee may form and delegate authority to subcommittees when appropriate.

III. Meetings

     The Audit Committee shall meet at least four times per year on a quarterly basis, or more frequently as circumstances require. As part of its job to foster open communication, the Audit Committee shall meet with management, the chief internal auditor and the independent auditors in separate executive sessions to discuss any matters that the Audit Committee or each of these groups believe should be discussed privately.

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Appendix A

IV. Authority and Responsibilities

     A primary responsibility of the Audit Committee is to oversee the Company’s corporate accounting and financial reporting practices and report its activities to the Company’s Board of Directors. In carrying out its responsibilities, the Audit Committee and its policies and procedures should remain flexible, in order to best react to changing conditions and circumstances.

     The Audit Committee shall perform the following functions:

With respect to the Independent Auditors

• Be directly responsible for the appointment, compensation and oversight of the independent auditors (including resolution of disagreements between management and the independent auditors regarding financial reporting) for the purpose of preparing its audit of the financial statements of the Company and its divisions and subsidiaries for each fiscal year.
  


• Meet with the independent auditors and financial management of the Company to review the scope of the proposed audit for the current year and the audit procedures to be utilized, the staffing for such audit and the proposed compensation and, for each fiscal year, to review the results of such audit, including any comments or recommendations of the independent auditors arising therefrom.
  


• Review the nature and scope of other professional services provided to the Company by the independent auditors and consider their relationship to the auditors’ objectivity and independence. The Audit Committee shall be satisfied as to the independence of the independent auditors and ensure that the independent auditors submit to the Audit Committee on an annual basis a written statement consistent with Independent Standards Board Standard No. 1.
  


• At least annually, obtain and review an annual report from the independent auditors describing (a) the independent auditors’ internal quality control procedures and (b) any material issues raised by the most recent internal quality control review, or peer review, of the independent auditors, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the independent auditors, and any steps taken to deal with any such issues.
  


• Review all reports required to be submitted by the independent auditors to the Audit Committee pursuant to the Act, including (a) a report of all critical accounting policies and practices to be used; (b) a report of all alternative treatments of financial information within generally accepted accounting principles that have been discussed

A-2

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Appendix A

with management officials of the Company, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditors; and (c) a report regarding all other material written communications between the independent auditors and management, such as the management letter or schedule of unadjusted differences.

With respect to the Annual Financial Statements:

• Review and discuss with management, the internal audit group and the independent auditors the Company’s financial statements to be included in the Annual Report to Stockholders including the content and the disclosures made in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
  


• Discuss with the independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61, as amended, relating to the conduct of the audit.
  


• Recommend to the Board that the Company’s annual audited financial statements be included in the Company’s annual report on Form 10-K for filing with the Securities and Exchange Commission (the “SEC”).
  


• Prepare the report required by the rules of the SEC to be included in the Company’s annual proxy statement and any other reports of the Audit Committee required by applicable securities laws or stock exchange listing requirements or rules.
  


• Review reports received from regulators and other legal and regulatory matters that may have a material effect on the financial statements of the Company or related compliance policies.

With respect to quarterly financial statements:

• Review and discuss with management and the independent auditors the Company’s quarterly financial statements, including disclosures made in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the independent auditors’ review of the quarterly financial statements, prior to submission to stockholders, any governmental body, any stock exchange or the public.

Annual reviews:

• Obtain and review an annual report from management relating to the accounting principles used in the preparation of the Company’s financial statements, including those policies for which management is required to exercise discretion or judgments regarding the implementation thereof.

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Appendix A

Periodic reviews:

		Periodically review separately with each of management, the independent auditors and the internal audit group (a) any significant disagreement between management and the independent auditors or the internal audit group in connection with the preparation of the financial statements, (b) any difficulties encountered during the course of the audit, including any restrictions on the scope of work or access to required information, and (c) management’s response to each.
		Periodically discuss with the independent auditors, without management being present, (a) their judgments about the quality and appropriateness of the Company’s accounting principles and financial disclosure practices as applied in its financial reporting, (b) the completeness and accuracy of the Company’s financial statements, and (c) the degree of aggressiveness and conservatism
		Consider and approve, if appropriate, significant changes to the Company’s accounting principles and financial disclosure practices as suggested by the independent auditors, management or the internal audit group. Review with the independent auditors, management and the internal audit group, at appropriate intervals, the extent to which any changes or improvements in accounting or financial practices, as approved by the Audit Committee, have been implemented.
		Review and discuss with management and the independent auditors and the Company’s in-house and independent counsel, as appropriate, any legal, regulatory or compliance matters that could have a significant impact on the Company’s financial statements, including applicable changes in accounting standards or rules.
Discussions with management:
		Review and discuss with management the Company’s earnings press releases, including the use of “pro forma” or “adjusted” non-GAAP information.
		Review and discuss with management all material off-balance sheet transactions, arrangements, obligations (including contingent obligations) and other relationships of the Company with unconsolidated entities or other persons, that may have a material current or future effect on financial condition, changes in financial condition, results of operations, liquidity, capital resources, capital reserves or significant components of revenues or expenses.
		Review and discuss with management the Company’s major risk exposures and the steps management has taken to monitor, control and manage such exposures, including the Company’s risk assessment and risk management guidelines and policies.

 

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Appendix A

With respect to the internal audit and reporting functions and internal controls:

• Based upon discussions with the independent auditors, review the internal audit function of the Company, including the independence and line of authority for its reporting obligations, the scope and the plan of the proposed audit for the succeeding fiscal year, the coordination of such plans with the independent auditors and appropriate staffing levels.
  


• In consultation with the independent auditors and the internal audit group, review the adequacy of the Company’s internal control structure and procedures designed to insure compliance with laws and regulations, and discuss the responsibilities, budget and staffing needs of the internal audit group.
  


• Inquire of financial management, the internal auditor and the independent auditors about significant risks or exposures and assess the steps management has taken to minimize such risks to the Company.
  


• Receive a summary of findings from completed internal audits and a progress report on the proposed internal audit plan, with explanations for any deviations from the original plan.
  


• Review the internal control report prepared by management, including management’s assessment of the effectiveness of the Company’s internal control structure and procedures for financial reporting and the independent auditors’ attestation, and report, on the assessment made by management.
  


• Establish procedures for (a) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and (b) the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.
  


• Ensure that there are no unjustified restrictions or limitations on the scope of the internal audit function, and review and consider management’s appointment, termination or replacement of the Vice President of Internal Audit and make recommendations thereon.
  


• Review on an annual basis the performance of the internal audit group.
  


• Review appropriate staffing levels for the accounting, financial and internal audit functions and succession planning related thereto.

Other:

• Submit the minutes of all meetings of the Audit Committee to, or report on the matters discussed at each committee meeting with, the Board of Directors.

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Appendix A

• Obtain the full Board of Directors’ approval of this Charter and review and reassess this Charter as conditions dictate (at least once per fiscal year).
  


• Review and approve all related-party transactions, as defined by SEC regulation S-K, Item 404(a).
  


• Review and approve (a) any change or waiver in the Company’s code of ethics for senior financial officers and (b) any disclosure made on Form 8-K regarding such change or waiver.
  


• Establish a policy addressing the Company’s hiring of employees or former employees of the independent auditors who were engaged on the Company’s account.
  


• Establish and maintain a confidential procedure, including but not limited to, access from the Company website whereby the Company and/or Company employees can contact the members directly in order to express any anonymous concerns about auditing or accounting matters.
  


• Review its own performance annually.
  


• Perform any other activities consistent with this Charter, the Company’s by-laws and governing law, as the Audit Committee or the Board deems necessary or appropriate.

V.	Resources:
		Investigate any matter brought to the attention of the Audit Committee within the scope of its duties, with the power to retain independent accounting and other consultants and/or outside counsel to advise the Audit Committee.
		The Audit Committee shall determine the extent of funding necessary for payment of compensation to the independent auditors for the purpose of rendering or issuing the annual audit report and to any independent legal, accounting and other consultants retained to advise the Audit Committee.

A-6

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Appendix B

PROPOSED AMENDMENT
OF
THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
SCHOLASTIC CORPORATION

     RESOLVED, that the Amended and Restated Certificate of Incorporation of this Corporation be amended by changing the first sentence of Article FOURTH to read as follows:

     “The total number of shares which may be issued by the Corporation is Seventy-six Million (76,000,000) shares, of which Seventy Million (70,000,000) shares shall be Common Stock having a par value of one cent ($.01) per share; Four Million (4,000,000) shares shall be Class A Stock having a par value of one cent ($.01) per share; and Two Million (2,000,000) shares shall be Preferred Stock having a par value of one dollar ($1.00) per share.”

B-1

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Appendix C

AMENDMENT NO. 2
(dated July 18, 2006)
TO
SCHOLASTIC CORPORATION 2004 CLASS A STOCK INCENTIVE PLAN

     Section 4.1 of the Scholastic Corporation 2004 Class A Stock Incentive Plan, as amended (the “Plan”) is further amended by substituting: “1,499,000” for “750,000” where it appears therein.

     Subject to the foregoing, the Plan remains in full force and effect in accordance with the terms thereof.

     The foregoing amendment was duly approved by resolution of the Human Resources and Compensation Committee of the Board of Directors of Scholastic Corporation at its meeting held on July 18, 2006.

C-1

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In the absence of specific directions noted below, it is understood that the undersigned’s shares of Common Stock will be voted FOR PROPOSAL 1.		Please Mark Here for Address Change or Comments	o
		SEE REVERSE SIDE

			FOR		WITHHOLD
1.	Proposal to elect 01 John L. Davies and 02 John G. McDonald as directors:		o		o
If you wish to vote for the election of directors and withhold authority to vote for any of the individual nominees, enter the name(s) of such nominee(s) below.

2.	In their discretion the proxies will vote upon such other matters as may be properly come before the meeting and as may properly be voted upon by the holders of Common Stock.
	Choose MLinkSM for fast, easy and secure 24/7 online access to your future proxy materials, investment plan statements, tax documents and more. Simply log on to Investor ServiceDirect® at www.melloninvestor.com/isd where step-by-step instructions will prompt you through enrollment.

Signature			Signature			Date
Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such.

  FOLD AND DETACH HERE  

Vote by Internet or Telephone or Mail
24 Hours a Day, 7 Days a Week

Internet and telephone voting is available through 11:59 PM Eastern Time
the day prior to annual meeting day.

Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner
as if you marked, signed and returned your proxy card.

Internet http://www.proxyvoting.com/schl Use the Internet to vote your proxy. Have your proxy card in hand when you access the web site.	OR	Telephone 1-866-540-5760 Use any touch-tone telephone to vote your proxy. Have your proxy card in hand when you call.	OR	Mail Mark, sign and date your proxy card and return it in the enclosed postage-paid envelope.

If you vote your proxy by Internet or by telephone,
you do NOT need to mail back your proxy card.

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SCHOLASTIC CORPORATION

Proxy for Annual Meeting of Stockholders, September 20, 2006

Please Complete and Return
(The Solicitation of This Proxy is Made of Behalf of the Board of Directors)

     The undersigned hereby appoints RICHARD ROBINSON and ANDREW S. HEDDEN, or either of them, each with full power of substitution and revocation, as proxies to represent the undersigned at the Annual Meeting of Stockholders of Scholastic Corporation to be held at 557 Broadway, New York, New York, on Wednesday, September 20, 2006 at 9:00 A.M. local time, and at any adjournment thereof, and to vote the shares of Common Stock the undersigned would be entitled to vote if personally present.

     If all or a portion of the shares you are voting are a result of your being a participant in the Scholastic Corporation 401(k) Savings and Retirement Plan, then you may instruct the plan Trustee how to vote all full and fractional shares attributable to your account invested in the Scholastic Corporation Stock Fund on July 26, 2006 by completing the reverse side of this card and returning it by September 15, 2006.

THIS PROXY IS CONTINUED ON THE REVERSE SIDE PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY TODAY (Continued and to be marked,dated and signed, on the other side)

Address Change/Comments (Mark the corresponding box on the reverse side)

5  FOLD AND DETACH HERE  5

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SCHOLASTIC CORPORATION

Proxy for Annual Meeting of Stockholders, September 20, 2006

(The Solicitation of This Proxy is Made of Behalf of the Board of Directors)

The undersigned hereby appoints RICHARD ROBINSON and ANDREW S. HEDDEN, or either of them, each with full power of substitution and revocation, as proxies to represent the undersigned at the Annual Meeting of Stockholders of Scholastic Corporation to be held at 557 Broadway, New York, New York, on Wednesday, September 20, 2006, at 9:00 A.M. local time, and at any adjournment thereof, and to vote the shares of Class A Stock the undersigned would be entitled to vote if personally present.

THIS PROXY IS CONTINUED ON THE REVERSE SIDE

PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY TODAY

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SCHOLASTIC CORPORATION
CLASS A STOCK PROXY

Annual Meeting of Stockholders, September 20, 2006

In the absence of specific directions noted below, it is understood that the undersigned’s shares of Class A Stock will be voted FOR THE ELECTION OF DIRECTORS and FOR EACH OF PROPOSALS 2 and 3.

The undersigned hereby votes the above number of shares of Class A Stock of Scholastic Corporation as follows:

	1.	Upon the election of: Richard Robinson, Rebeca M. Barrera, Ramon C. Cortines, Andrew S. Hedden, Mae C. Jemison, Peter M. Mayer, Augustus K. Oliver and Richard M. Spaulding.
		FOR:		WITHHOLD
	2.	Approval of an amendment to the Scholastic Corporation Amended and Restated Certificate of Incorporation of the Company.
		FOR:		WITHHOLD
	3.	Approval of an Amendment to the Scholastic Corporation 2004 Class A Stock Incentive Plan.
		FOR:		WITHHOLD
	4.	In their discretion, the proxies will vote upon such other matters as may properly come before the meeting and as may properly be voted upon by the holders of Class A Stock.

Signature(s):			Date:

Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such.

Please mark your vote as indicated in this example X

	Stockholder Name (please print)

1

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