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                                                                   Exhibit 10.16


                                   PEARSON PLC

                        ANNUAL BONUS SHARE MATCHING PLAN

                                      RULES

This Annual Bonus Share Matching Plan is intended to encourage Participants to
stay with the Group and to identify with the interests of shareholders by
investing some of their own funds in the Company. An individual who is invited
to participate in this Annual Bonus Share Matching Plan may elect for up to 50%
of the after-tax amount of his annual bonus to be used to acquire Shares which
will be held for a period of three or five years under the terms of this Plan as
set out below. At the end of the three or five year period, provided the
Participant has remained an employee of the Group and a performance target has
been satisfied, the Shares will be released to the Participant together with a
number of additional Shares.

The definitions of terms used in these rules are set out in rule 6 below.

GRANT OF AWARDS

BASIC AWARDS

1.1. Following the notification of the amount of any Bonus payable under a Plan,
each Participant may be invited by the Committee to elect to receive up to 50%
of the cash amount of Bonus (after deduction of income tax at the Participant's
marginal rate and employees' national insurance contributions, if payable or, in
relation to non-UK resident Participants, any applicable personal taxation) as a
Basic Award.

1.2. For the purposes of the acquisition of Shares which shall comprise a Basic
Award:

             (i)  the Committee shall, subject to rule 1.11, have absolute
                  discretion as to when the Shares are purchased PROVIDED THAT
                  all the Shares required to satisfy Basic Awards for all
                  Participants shall be purchased on the same dealing day;

            (ii)  the price at which the Shares are purchased shall be the best
                  price reasonably obtainable on the London Stock Exchange; and

           (iii)  the nearest whole number of Shares shall be acquired with the
                  amount in 1.1 above. Any sum remaining following the
                  acquisition of the Shares shall be retained by the Committee
                  for the purpose of making future Awards under this Annual
                  Bonus Share Matching Plan.

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MATCHING AWARDS

1.3 Whenever the Committee grants a Basic Award, it shall also grant a Matching
Award comprising the nearest whole number of Shares which may be acquired (at
the price referred to in rule 1.2(ii) above) with the Gross Amount of Bonus used
to calculate that Basic Award.

RELEASE PERIODS

1.4 On the third anniversary of the Grant Date, or as soon as reasonably
practicable thereafter, a Participant will be notified whether or not the
performance target set out in rule 1.9 below has been satisfied over this three
year period. A Participant may elect, within 30 days of such notification for
the Basic Award to be released to him.

1.5 If the Participant so elects under rule 1.4 for the release of the Basic
Award and:

             (i)  the performance target set out in rule 1.9 below has been
                  satisfied, the Restricted Period in relation to the Basic
                  Award shall cease and the Basic Award together with one half
                  of the Matching Award shall be released as soon as reasonably
                  practicable thereafter. The balance of the Matching Award
                  shall lapse;

            (ii)  the performance target set out in rule 1.9 below has not been
                  satisfied, the Restricted Period in relation to the Basic
                  Award shall cease and the Basic Award shall be released as
                  soon as reasonably practicable thereafter. The Matching Award
                  shall lapse in its entirety.

1.6 If the Participant does not elect for the release of the Basic Award under
rule 1.5 and:

            (i)   the performance target set out in rule 1.9 below is satisfied
                  on the third anniversary of the Grant Date; or

           (ii)   the performance target set out in rule 1.9 below is not
                  satisfied on the third anniversary of the Grant Date

the Restricted Period in relation to the Basic Award shall continue and the
Matching Award shall remain subject to the performance target set out in rule
1.9 below over a five year period from the Grant Date. On the fifth anniversary
of the Grant Date, or as soon as reasonably practicable thereafter, a
Participant will be notified whether the performance target set out in rule 1.9
below has been satisfied over this five year period. If the performance target
has been

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satisfied, the Basic Award together with the Matching Award shall be released
automatically.

1.7 Where a Participant elects, under rule 1.6(i) for an Award to continue to
the fifth anniversary of the Grant Date and the performance target in rule 1.9
below is not satisfied over the five year period, the Basic Award together with
one half of the Matching Award shall be released to the Participant as soon as
reasonably practicable after the fifth anniversary of the Grant Date. The
balance of the Matching Award shall lapse

1.8 In the event that the performance target set out in rule 1.9 below is not
satisfied on either the third or the fifth anniversary of the Grant Date, the
Restricted Period in relation to the Basic Award shall cease and the Basic Award
shall be released to the Participant as soon as reasonably practicable
thereafter but the Matching Award shall lapse.

PERFORMANCE TARGET

1.9 The performance target referred to in rules 1.4, 1.5, 1.6, 1.7 and 1.8 is
that the percentage growth in the adjusted earnings per share of the Company
over the relevant period (comparing the adjusted earnings per share) stated in
the Company's accounts for the financial year ended prior to the Grant Date with
that for the financial year ending three or five years, as the case may be,
later) shall exceed the percentage growth in the UK Retail Prices Index (All
Items) by an average of at least 3 per cent. per annum.

GRANT PROCEDURE

1.10 As a condition of receiving an Award, each Participant shall be required to
agree to be bound by these rules.

1.11 Subject to the Participant's agreement referred to in rule 1.10 above, the
Award shall be granted by the Committee within 28 days of the Participant's
election to receive the Award unless the making of the Award would be prohibited
by law or the Model Code for Securities Transactions by Directors of Listed
Companies (or the Company's dealing rules). If at the end of the 28 day period
such prohibition remains in force, the Committee shall invite the Participant to
reconsider whether he wishes to elect to receive an Award or whether he wishes
to receive all of his Bonus in cash.

1.12 Each Award shall be evidenced by a Grant Letter which shall be signed on
behalf of the Company.

1.13 The Company shall be under no obligation to purchase the Shares comprised
in a Matching Award at or around the Grant Date but shall procure that there are
sufficient Shares available for transfer to satisfy a Matching Award by the
relevant release date set out in rules 1.4, 1.5, 1.6 and 1.7 above.

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1.14 Nothing in these rules or in a Participant's contract of employment shall
be construed as giving to any Participant a right to receive, or be considered
for, an Award. Neither an Award nor the Shares to which it relates shall be
pensionable for any purpose.

TERMS OF AWARDS

2.1 The main terms of each Award (which shall be set out or referred to in the
Grant Letter) shall be as follows:

(a)      NUMBER OF SHARES AND THE PERFORMANCE TARGET - The Grant Letter shall
         state the number of Shares comprised in the Basic Award and the
         Matching Award, and the performance target to which the Matching Award
         is subject.

(b)      RESTRICTED PERIOD FOR BASIC AWARD - The Restricted Period in relation
         to a Basic Award shall commence on the Grant Date and shall (unless
         foreshortened pursuant to these rules) expire on the third or fifth
         anniversary thereof as set out in rules 1.4, 1.5, 1.6, 1.7 and 1.8
         above. During the Restricted Period, the Participant shall not sell,
         transfer, pledge, assign or otherwise dispose of all or any Shares
         comprised in the Basic Award. Any attempt by the Participant to sell,
         transfer, pledge, assign or otherwise dispose of such Shares or any
         interest therein shall result in the immediate forfeiture of the Shares
         comprised in the Basic Award.

(c)      RIGHTS OF PARTICIPANT DURING RESTRICTED PERIOD - The beneficial
         interest in the Shares comprised in a Basic Award shall pass to the
         Participant on the Grant Date, even though the Shares comprised therein
         are capable of forfeiture in accordance with these rules. During the
         Restricted Period, the Participant shall be entitled to receive all
         dividends payable in respect of the Shares and shall have the rights
         commonly enjoyed by a beneficial owner of Shares. The Participant shall
         have no such rights in respect of Shares comprised in a Matching Award.

(d)      REGISTRATION AND CUSTODY OF SHARES - The Shares comprised in a Basic
         Award shall be registered in the name of the Participant, but the
         Participant shall be required to deposit the certificates relating to
         those Shares with the Secretary throughout the Restricted Period.

(e)      LAPSE OF RESTRICTIONS - Within 14 days following the expiry of the
         Restricted Period, the Secretary shall deliver to the Participant the
         certificate(s) in relation to the Shares comprised in the Basic Award.

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(f)      TERMINATION OF EMPLOYMENT - In the event that the Participant ceases to
         be an employee of a member of the Group during the Restricted Period:

             (i)  by reason of death, injury, disability or normal retirement
                  (aa) the Basic Award shall continue in force until the date on
                  which the linked Matching Award is released or lapses if the
                  performance target set out in rule 1.9 is not satisfied, and
                  (bb) the Matching Award shall continue (as though the
                  Participant had remained in employment) until the next to
                  occur of the third or fifth anniversary of the Grant Date, at
                  which time (if the performance target is met) the Shares
                  comprised therein shall be released but reduced pro-rata to
                  reflect the Participant's actual period of service until his
                  termination date PROVIDED THAT if the performance target was
                  met at the third anniversary of the Grant Date, and the
                  Participant leaves after that date, he shall be entitled to
                  one half of the Matching Award in full and the pro-rata
                  reduction shall apply to the balancing one half in respect of
                  the period from the third anniversary of the Grant Date to the
                  termination date. For the avoidance of doubt, if the
                  performance target is not met at the relevant anniversary, the
                  Matching Award shall lapse in its entirety and the Restricted
                  Period in relation to the Basic Award shall cease and the
                  Basic Award shall be released as soon as reasonably
                  practicable thereafter; or

            (ii)  for any other reason than in (i) above (aa) the Basic Award
                  shall be released as soon as practicable following cessation
                  of employment unless the Committee determines that the
                  Participant is entitled to retain the Matching Shares in which
                  case the Basic Award shall continue in force until the date on
                  which the Matching Award is released or lapses, and (bb) the
                  Matching Award shall be treated in such manner as the
                  Committee, in its absolute discretion determines. For the
                  avoidance of doubt, the Committee may determine that the
                  Matching Award shall lapse in its entirety.


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(g)      CHANGE OF CONTROL - If any person:

                 (i)   obtains Control of the Company as a result of making an
                       offer to acquire Shares which is either unconditional or
                       is made on a condition such that if it is satisfied the
                       person making the offer will have Control of the Company;

                 (ii)  becomes bound or entitled to acquire Shares under
                       sections 428 to 430F of the Companies Act 1985; or

                 (iii) obtains Control of the Company in pursuance of a
                       compromise or arrangement sanctioned by the Court under
                       section 425 of the Companies Act 1985,

         then both the Basic Award and the Matching Award shall be released
         within 30 days of the relevant event. The performance target shall not
         apply.

ADJUSTMENTS

3.1 In the event of any capitalisation issue, rights issue or sub-division or
consolidation of or other variation in the ordinary share capital of the
Company:

(a)      the Participant shall, in respect of his Basic Award, be treated in the
         same manner as any other holder of Shares, save that (unless the
         Committee determines otherwise):

             (i)  in the event of a rights issue in respect of Shares, the
                  Participant shall be required to sell sufficient rights
                  nil-paid (at such time during the rights issue as the
                  Secretary thinks fit) as will enable the Participant to
                  acquire with the proceeds of sale the remainder of his rights
                  entitlement;

            (ii)  in the event of receipt of cash (other than dividends paid in
                  the normal course) or securities (other than Shares) in
                  respect of Shares (on a demerger or other reorganisation of
                  the share capital of the Company), the Participant shall be
                  required to apply that cash (or the proceeds of sale of such
                  securities), after allowing for tax thereon, in the purchase
                  of further Shares; and

           (iii)  the Participant shall deposit with the Secretary for the
                  remainder of the Restricted Period the certificates in respect
                  of Shares or other securities received in connection with the
                  relevant event; and

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(b)      the number of Shares comprised in the Participant's Matching Award
         shall be adjusted in such manner as the Committee, in its absolute
         discretion, thinks fit.

SOURCE OF SHARES

4.1 Unless the Committee invokes this rule, Shares required to satisfy the
rights of Participants with respect to Awards shall be purchased on the London
Stock Exchange. However, notwithstanding rule 1.2, the Committee may permit
subscriptions of Shares to satisfy the rights of Participants with respect to
Awards. The aggregate number of Shares which may be issued for such purposes,
when added to the number of Shares issued or issuable pursuant to subsisting
rights to subscribe for Shares granted under any other Employees' Share Scheme
established by the Company, shall not exceed on the date of subscription:

(a)      5% of the issued ordinary share capital of the Company at that date in
         respect of rights under this Plan and any other Employees' Share
         Schemes granted in the preceding 10 years; or

(b)      3% of the issued ordinary share capital of the Company at that date in
         respect of rights under this Plan and any other Employees' Share
         Schemes granted in the preceding 3 years.

References to issues of Shares shall, for the avoidance of doubt, only include
arrangements under which Shares are newly allotted and issued.

ADMINISTRATION

5.1 The rights and obligations of any Participant under the terms of his office
or employment shall not be affected by his participation in the Annual Bonus
Share Matching Plan, and each Participant shall be deemed to waive all and any
rights to compensation or damages in consequence of the termination of his
office or employment for any reason whatsoever insofar as those rights arise or
may arise from his ceasing to have rights hereunder as a result of such
termination or from the loss or diminution in value of such rights or
entitlements.

5.2 All Share certificates and other communications relating to the Annual Bonus
Share Matching Plan shall be sent at the Participant's risk.

5.3 Any liability of a Participant to taxation in respect of an Award shall be
for the account of the relevant Participant, and the Participant shall comply
with any arrangements specified by the Company for the payment of taxation
(including, without limitation, the sale of sufficient Shares to enable the
Company to satisfy its obligations in respect of deduction of taxation at
source).

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GENERAL

6.1. The Company reserves the right to terminate the Annual Bonus Share Matching
Plan or amend these rules at any time PROVIDED THAT the provisions governing
eligibility to participate in this Annual Bonus Share Matching Plan, individual
participation limits, the number of shares available under Awards and the
consequences of any capitalisation issue, rights issue or sub-division or any
other variation of capital cannot be altered to the advantage of Participants
without the prior approval of shareholders in general meeting (except for minor
amendments to benefit the administration of the Annual Bonus Share Matching
Plan, to take account of a change in legislation or to obtain or maintain
favourable tax, exchange control or regulatory treatment for participants or for
any group company). In addition, no amendment shall operate to affect adversely
any right already acquired by a Participant.

6.2. This Annual Bonus Share Matching Plan shall constitute an Employees' Share
Scheme so that financial assistance provided by the Company or its subsidiaries
for those purposes shall be lawful by reason of section 153(4)(b) of the Act.

6.3 The Company shall bear all dealing costs and stamp duty relating to the
purchase of Shares under this Annual Bonus Share Matching Plan.

6.4. These rules shall be governed by and construed in accordance with English
law.

DEFINITIONS

7.1 In these rules, unless the context otherwise requires, the following
expressions shall have the following meanings respectively:

AWARD shall mean a Basic Award and the Matching Award linked to that Basic
Award;

BASIC AWARD shall mean an award of Shares made under rule 1.1 of this Bonus
Matching Plan;

CASH BONUS shall mean a cash bonus payable under an annual bonus plan;

COMMITTEE shall mean the personnel committee of the Company or another
appropriate committee of the board of the Company;

COMPANY shall mean Pearson plc;

CONTROL shall have the meaning given to it by section 840 of the Income and
Corporation Taxes Act 1988;

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EMPLOYEES' SHARE SCHEME shall have the meaning given to it by section 743 of the
Companies Act 1985 (being a scheme for encouraging or facilitating the holding
of Shares by employees of the Group);

GRANT DATE shall mean the date on which an Award is made by the Committee under
rule 1.11;

GRANT LETTER shall mean the notification to a Participant setting out the terms
of an Award;

GROSS AMOUNT OF BONUS shall mean the amount of Bonus elected by a Participant
under rule 1.1 to be received as a Basic Award (prior to the deduction of tax
thereon);

GROUP shall mean the Company and the Subsidiaries, and MEMBER OF THE GROUP shall
be construed accordingly;

MATCHING AWARD shall mean a conditional award of additional Shares linked to a
Basic Award, made under rule 1.3 and released in accordance with rules 1.4, 1.5,
1.6, 1.7 and 1.8 of this Bonus Matching Plan;

NOMINATED TRANSFEREE shall mean a person nominated by the Company to acquire
Shares from a Participant in accordance with rule 2.1(g) (including, without
limitation, an employee trust established by the Company for the purpose of
facilitating distributions of Shares to and acquiring Shares from employees
holding Shares);

PARTICIPANT shall mean an individual participating in a Plan;

RESTRICTED PERIOD in relation to a Basic Award, shall mean the period specified
in rule 2.1(b);

A PLAN shall mean an annual bonus plan operated by any member of the Group;

THE SECRETARY shall mean the Secretary of the Company, or some other person
nominated by the Committee;

SHARE shall mean an ordinary share in the capital of the Company or any other
shares representing those Shares following any reorganisation of the share
capital of the Company; and

SUBSIDIARY shall mean any company which at the time qualifies as a subsidiary of
the Company under Section 736 of Companies Act 1985.

7.2 References to any statute or statutory instrument or to any part or parts
thereof include any modification, amendment or re-enactment thereof for the time
being in force.

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7.3 Words of the masculine gender shall include the feminine and vice versa and
words in the singular shall include the plural and vice versa unless in either
case the context otherwise requires or is otherwise stated.





Amended 12 May 2000


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