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                                                            EXHIBIT (10)(iii)(A)


                  COMPENSATION OF NON-EMPLOYEE DIRECTORS POLICY
                      RESTATED AS IN EFFECT JANUARY 1, 1999


A.   Each Director of Houghton Mifflin Company who is not an employee shall
     receive compensation from the Company with respect to each calendar year in
     amounts and payable as follows:

     1.   A retainer of $10,000 per year, payable in cash quarterly during the
          year of service. With respect to Directors who have retired, resigned
          or been elected during the year, the retainer shall be prorated based
          on the portion of the year served as a Director.

          In addition to the retainer, each Director shall receive $700 for
          attendance at each Board meeting; Directors who serve on Board
          committees shall receive $500 for each Committee meeting attended;
          Directors who are committee chairmen shall receive an additional
          $2,500 annual retainer; and Directors who are members of the Executive
          Committee shall receive an additional annual retainer of $4,000 in
          lieu of fees for attendance at Executive Committee meetings.

          A Director may elect to receive a whole number of shares of common
          stock of the Company equal in value to all or any part of his or her
          annual retainer and meeting fees in place of payment in cash. The
          election must be made in writing and delivered to the Compensation &
          Nominating Committee before the beginning of the calendar year in
          which the retainer fee is earned, and becomes irrevocable on the last
          day prior to the beginning of that calendar year. Any election shall
          continue and apply to subsequent calendar years until terminated or
          modified by written notice delivered to the Committee. A notice of
          termination or modification will be effective as of the end of the
          calendar year in which the notice is delivered, and shall apply to
          retainer and meeting fees payable in subsequent years. Any shares to
          be delivered pursuant to such an election shall be delivered
          quarterly, and shall be valued at the closing price per share of
          Company stock as reported by the New York Stock Exchange on the last
          business day of each calendar quarter. The value of fractional shares
          shall be paid in cash.

     2.   1,000 shares of Company stock. The shares shall be issued at their
          closing market value on the day before the regularly scheduled meeting
          of the Board in the month of January of the following year. With
          respect to Directors who have retired, resigned or been elected during
          the year, the number of shares shall be prorated based on the portion
          of the year served as a Director.

     3.   Options to purchase 2,000 shares of Company stock to be issued at the
          closing market value on the day before the regularly scheduled meeting
          of the Board in the month of January of the year of service.



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B.   All or a portion of the compensation payable under A.1 above may be
     deferred at the option of each Director pursuant to a Deferred Compensation
     Agreement with the Company.

C.   As an element of the compensation of Directors who are not employees of
     Houghton Mifflin Company, such Directors shall receive the following
     retirement and/or death benefit after leaving service as a Director:

     1.   The benefit shall be an amount equal to 1.5 times the regular
          quarterly cash retainer in effect at the time of the Director's
          departure from the Houghton Mifflin Company Board of Directors,
          payable for a number of quarters equal to the number of quarters (or
          fraction thereof) for which the Director served as a regular Director
          of the Company. The benefit will be paid quarterly to coincide with
          the quarterly retainer fee payments to active Directors.

     2.   The benefit shall be payable only to outside Directors who leave
          service without having been removed for cause.

     3.   No benefit will be paid to a former Director who, without the consent
          of Houghton Mifflin Company, is engaged in or affiliated with any
          business entity or activity which directly or indirectly competes with
          Houghton Mifflin Company or any of its subsidiaries.

     4.   For a Director who retires or resigns from the Board, the benefit
          shall be payable commencing upon the later of (a) the date of the
          Director's departure from the Board or (b) the date the Director
          becomes 65 years of age. The Compensation & Nominating Committee may,
          in its discretion, make the benefit payable at such earlier date and
          with such commuted value adjustment, if any, as the Committee may
          determine.

     5.   If a Director dies in service, before commencement of payment of the
          benefit, or before completion of all payments due, the retirement
          benefit shall be paid in quarterly payments, commencing immediately,
          to the Director's designated beneficiary or, if none, to the
          Director's estate in one lump sum with such commuted value adjustment,
          if any, as the Committee may determine.

     6.   Accrued and unpaid benefits under this plan will be an unfunded and
          unsecured obligation of Houghton Mifflin Company. The Board of
          Directors may amend, suspend, or terminate this retirement plan or any
          benefit under it at any time, but no amendment, suspension, or
          termination shall, without the consent of a Director, impair the
          rights of the Director in any benefits theretofore accrued under the
          plan.