Investor anger forces Reed to amend executive pay scheme

Following massive shareholder pressure, Reed Elsevier has added extra conditions to its executive incentive scheme in an attempt to head off a revolt at its forthcoming annual general meeting.

The company has already controversially redrawn the criteria for its directors' bonus scheme, taking out share price performance after executives missed out on a possible £20m windfall under the current plan.

However, shareholder groups have said they are unhappy about the new scheme, claiming it offers massive rewards for mediocre performance. The scheme was sent to shareholders on 7 March but the company announced last night that, after meetings with institutional investors, its remuneration committee had decided to modify it. Under the adjusted scheme, directors will only be given share options if an additional performance criteria is met.

"This condition requires a minimum growth in adjusted earnings per share at constant currencies of 6 per cent per annum compound in the three years from grant, with no re-testing of this condition," Reed said.

The executive incentive plan will be put to shareholders at the AGM on 8 April. The collapse in media shares over the last two years left Reed's directors, including its chief executive Crispin Davis, with no chance of seeing a pay-out under the existing scheme.

The company has stressed it is proposing a whole new scheme, to come into operation from next year, rather than meddling with the existing incentive arrangements.