DIRECTORS’ REMUNERATION REPORT (b) Individual emoluments of executive directors £ € Salary Benefits Bonus Total 2002 Salary Benefits Bonus Total 2002 G J A van de Aast 369,000 17,492 294,517 681,009 538,674 535,050 25,363 427,050 987,463 856,492 M H Armour 471,000 23,466 362,764 857,230 689,127 682,950 34,026 526,008 1,242,984 1,095,712 C H L Davis  945,000 27,035 746,344 1,718,379 1,366,543 1,370,250 39,201 1,082,199 2,491,650 2,172,803 D J Haank (until  18 June 2003) 200,217 6,914 – 207,131 563,240 290,315 10,025 – 300,340 895,552 A Prozes 582,822 8,353 431,055 1,022,230 1,030,820 845,092 12,112 625,030 1,482,234 1,639,005 P Tierney (from 8 April 2003) 423,333 9,434 419,632 852,399 – 613,833 13,680 608,466 1,235,979 – Total 2,991,372 92,694 2,254,312 5,338,378 4,188,404 4,337,490 134,407 3,268,753 7,740,650 6,659,564 Benefits include the provision of a company car, medical insurance and life assurance. C H L Davis was the highest paid director in 2003, including gains of £4,960,150/ € 7,192,217 on the exercise of nil cost options awarded on his appointment as Chief Executive Officer in 1999. Mr Davis invested the entire after tax gain arising from the exercise of his options in Reed Elsevier PLC/Reed Elsevier NV shares. D J Haank served as a director until 18 June 2003 and remained an employee until 31 August 2003. During the period 18 June to 31 August 2003 he received emoluments of £87,759/ € 127,251, comprising salary (£84,839/ € 123,017) and other benefits (£2,920/ € 4,234). In accordance with the terms of the share options in force at the time of their grant in 1999, Mr Haank has retained his entitlement to options over 18,497 Reed Elsevier PLC shares and 10,925 Reed Elsevier NV shares, as detailed in the schedules on pages 36 and 37. All other options granted to Mr Haank lapsed on termination of his employment. The Committee reviews the pension arrangements for the executive directors to ensure that the benefits provided are consistent with those provided by other multinational companies in its principal countries of operation. Executive directors based in the United Kingdom are provided with pension benefits at a normal retirement age of 60, equivalent to two thirds of base salary in the 12 months prior to retirement, provided they have completed 20 years’ service with Reed Elsevier or at an accrual rate of 1/30th of pensionable salary per annum if employment is for less than 20 years. The target pension for C H L Davis at normal retirement age of 60 is 45% of base salary in the 12 months prior to retirement.  In 1989, the Inland Revenue introduced a cap on the amount of pension that can be provided from an approved pension scheme. M H Armour’s, G J A van de Aast’s and C H L Davis’s pension benefits will be provided from a combination of the Reed Elsevier Pension Scheme and the company’s unapproved, unfunded pension arrangements. The target pension for A Prozes, a US based director, is US$300,000 per annum, which becomes payable on retirement only if he completes a minimum of seven years’ service. This pension has no associated contingent benefits for a spouse or dependants, and will be reduced in amount by the value of any other retirement benefits payable by the company or any former employer, other than those attributable to employee contributions. The target pension for P Tierney, a US based director, after completion of five years pensionable service is US$440,000 per annum, inclusive of any other retirement benefits from any former employer. In the event of termination of employment before completion of five years’ pensionable service, the pension payable will be reduced proportionately, subject to a minimum pension of US$220,000 per annum in the event of termination of employment for reasons other than resignation or dismissal for cause. The pension arrangements for all the directors include life assurance cover whilst in employment, an entitlement to a pension in the event of ill health or disability and, except in the case of A Prozes, a spouse’s and/or dependants’ pension on death. (c) Pensions REED ELSEVIER ANNUAL REPORTS & FINANCIAL STATEMENTS 2003 33