Reed quintet boasts 40% rise in income

BONUSES at Reed International enabled five executive directors to boost their incomes by around 40 per cent last year.

Among them was Peter Davis, chairman and highest-paid director, who earned a total of pounds 636,592, including a pounds 180,000 performance-related bonus.

Reed International's six executive directors earned performance-related bonuses of more than pounds 1.16m on top of salaries of pounds 1.93m, said the annual report. This implies an average bonus of 60 per cent of salary. However the rules of the scheme state that no UK director should earn more than 40 per cent of salary in bonus.

A spokesman for Reed refused to elaborate but the explanation is likely to lie in the fact that one of the six directors, Peter Krakoff, is based in the US where bonuses traditionally make up a greater proportion of salary.

The Reed bonus scheme is based on profit and operating cash flow targets for Reed Elsevier - the Anglo-Dutch publishing business of which Reed International forms the UK arm - plus gains in Reed International's earnings per ordinary share, which rose on an underlying basis by 17 per cent last year.

In addition to its bonus scheme, Reed runs a separate share-option based 'Longer Term Incentive Plan', which was introduced for executive directors and other senior executives two years ago.

The right to exercise the options is also based on growth in Reed International's earnings per share but over a three-year, rather than a one-year, period. Once exercised, executives must hold the shares for at least three years.