exv4w4






Exhibit 4.4




 






RULES OF THE

REED ELSEVIER GROUP PLC GROWTH PLAN




 






Approved by shareholders of

Reed Elsevier PLC in general meeting on 21 April 2010



Approved by shareholders of

Reed Elsevier NV in general meeting on 20 April 2010



Adopted by the directors of Reed Elsevier Group plc on 21 April 2010







 









 





THE REED ELSEVIER GROUP PLC GROWTH PLAN 2010



1. Definitions



1.1 In this Plan, unless the context otherwise requires, the following expressions have the
following meanings:





Award means, as the context requires, a Performance Share Award and/or a Matching Share Award;




Cap means the overall individual limit on Shares which a Participant may receive under the Plan
as set out in Rule 3;




Capital Reorganisation means any variation in the share capital or reserves of a Qualifying
Company (including, without limitation, by way of capitalisation issue, rights issue,
sub-division, consolidation, or reduction);




CEO means the Chief Executive Officer of the Company;




CFO means the Chief Financial Officer of the Company;




Committee means the remuneration committee of the board of directors of the Company or other duly
authorised committee;




Company means Reed Elsevier Group plc;




Control has the meaning given to it by section 995 of the Income Taxes Act 2007;




Date of Grant means the date on which an Award is granted;




Dealing Day means a day on which the London Stock Exchange, the Amsterdam Stock Exchange,
Euronext, the New York Stock Exchange (or, where the primary listing of a company in the
Comparator Group is outside the UK, the US or the Netherlands, the exchange on which such
company’s shares are listed) is open for the transaction of business;




Dealing Restrictions means any restrictions on, or requirement for approvals for dealing in
Shares whether under the Company’s, RE PLC’s or RE NV’s share dealing rules, the provisions of
the Model Code for Securities Transactions by Directors of Listed Companies, the provisions of
the Listing Rules of the UK Listing Authority or the City Code on Takeovers and Mergers or any of
their equivalents in any applicable jurisdiction;




Deferred Performance Shares means the Shares comprised in a Performance Share Award in respect of
which the Committee has determined that the performance conditions imposed under Rule 6.3 have
been satisfied but which, except as otherwise provided in these Rules, Vest on the Five Year
Vesting Date;




Dividend Equivalent means a right to a cash payment or Shares in accordance with Rule 12.



Page 1









 






Dutch Share means an ordinary share in the capital of RE NV or shares representing those shares
following any Capital Reorganisation of RE NV and includes an American Depositary Share
representing a Dutch Share;




Executives means the CEO and the CFO;




Five Year Vesting Date means the date following the end of the financial year of the Qualifying
Companies ending 31 December 2014, on which the Committee determines the extent to which the
performance conditions imposed under Rule 9.3 have been satisfied or if there are Dealing
Restrictions in place on that date, Vesting will be on such later date when those Dealing
Restrictions lift;




Group means the Company and every company which is under the Control of the Company and member of
the Group will be construed accordingly;




Matching Share Award means a right granted under Rule 9 to receive Shares without payment and
references to Matching Shares will be construed accordingly;




Participant means any individual who holds a subsisting Award (including, where the context
permits, the legal personal representatives of a deceased Participant);




Performance Share Award means a right granted under Rule 6 to receive Shares without payment and
references to Performance Shares will be construed accordingly;




Personal Shares means any Shares which are beneficially owned by a Participant, excluding any
Shares invested in the Reed Elsevier Group plc Bonus Investment Plan 2003 or the Reed Elsevier
Group plc Bonus Investment Plan 2010;




Plan means this Reed Elsevier Group plc Growth Plan as amended from time to time;




Qualifying Company means each of RE PLC and RE NV;




RE NV means Reed Elsevier NV;




RE PLC means Reed Elsevier PLC;




Rules means these Plan rules;




Share means a UK Share and/or a Dutch Share and Shareholder will be construed accordingly;




Termination Date means the date on which a Participant ceases to be employed by RE PLC, RE NV or
any member of the Group;




Three Year Vesting Date means the date following the end of the financial year of the Qualifying
Companies ending 31 December 2012, on which the Committee determines the extent to which the
performance conditions imposed under Rule 6.3 have been satisfied or if there are Dealing
Restrictions in place on that date, Vesting will be on such later date when those Dealing
Restrictions lift;



Page 2









 






UK Share means an ordinary share in the capital of RE PLC or shares representing those shares
following any Capital Reorganisation of RE PLC and includes an American Depositary Share
representing a UK Share; and




Vesting Date means the date on which a Participant becomes absolutely entitled to receive Shares
under an Award or Deferred Performance Shares in accordance with these Rules and Vest, Vested and
Vesting will be construed accordingly.


1.2 Where the context permits the singular will include the plural and vice versa and the masculine
will include the feminine. Headings will be ignored in construing the Plan.



1.3 References to any act of Parliament will include any statutory modification, amendment or re
enactment thereof.



2. Eligibility



Participation in the Plan is restricted to the Executives.



3. Overall Individual Limit for Awards



3.1 Notwithstanding any other provision of the Rules, the total number of Shares which a
Participant may receive in respect of Awards granted under the Plan will not exceed 150% of the
number of Shares comprised in the Participant’s Performance Share Award. Dividend Equivalents do
not count towards this limit.



3.2 If a Participant ceases to be an Executive in circumstances where Rule 13.3 applies, this limit
will be reduced by multiplying it by A/B where A is the number of complete calendar months which
the Executive was employed between 1 January 2010 and 31 December 2014 and B is 60 or such other
reduction as the Committee may determine appropriate.



4. Requirement to Commit Personal Shares



4.1 Participation in this Plan is subject to the Participant committing a specified number of
Personal Shares to the Plan as at the Date of Grant of a Performance Share Award (or by such other
date as the Committee may permit in its discretion). To the extent that any or all of a
Participant’s Personal Shares are not so committed by the prescribed date, any Awards will
immediately lapse in full.



4.2 The number of Personal Shares required to be committed to the Plan is, in the case of the CEO
300% and, in the case of the CFO 200% of the Participant’s basic annual salary as at the Date of
Grant of the Participant’s Performance Share Award.



4.3 The Committee will determine the method by which Participants are required to commit Personal
Shares to the Plan. This may include requiring that:





	(a)	 	the Participant signs an undertaking to retain the beneficial ownership of the Personal
Shares until the Five Year Vesting Date and not to charge, pledge or grant any lien or
security over them; or
	 
	(b)	 	the Participant’s Personal Shares are transferred to and held by a specified nominee on the
Participant’s behalf.










Page 3









 










4.4 A Participant’s Personal Shares must remain committed to the Plan for so long as he continues
to hold an Award. A Participant’s Performance Share Award, entitlement to Deferred Performance
Shares and Matching Share Award will lapse with immediate effect if any of his Personal Shares
cease to be committed to the Plan, except as expressly provided for by these Rules.



5. General provisions relating to Awards



5.1 The grant of an Award is conditional upon a Participant agreeing to comply with any
arrangements specified by the Company for the payment of tax and social security contributions in
respect of Shares to which he is or may become entitled under the Plan including, without
limitation (i) the right to sell on the Participant’s behalf sufficient Shares to satisfy any tax
or social security contributions liability on his part for which any member of the Group may be
liable and (ii) entering into any election under Chapter 2 of Part 7 of the Income Tax (Earnings &
Pensions) Act 2003 specified by the Company.



5.2 In addition to the performance conditions imposed by Rules 6.3 and 9.3 and the condition
imposed by Rule 5.1, the Committee may make the grant of Awards subject to any other conditions it
determines appropriate including requiring a Participant to agree to comply with certain
post-employment restrictive covenants.



5.3 Awards will be granted by deed. Each Participant will receive a statement (electronically or in
hard copy) following the relevant Date of Grant summarising the main terms of the Award.



6. Grant of Performance Share Awards



6.1 Subject to the terms of these Rules, the Committee may grant a Performance Share Award to an
Executive in its absolute discretion.



6.2 A Performance Share Award may only be granted during the period of 42 days commencing on:-





	(a)	 	the day following the day on which the Plan was approved by both RE PLC in general meeting
and RE NV in general meeting; or
	 
	(b)	 	the day following the lifting of any Dealing Restrictions which prevented the granting of the
Performance Share Award during the period specified above,




unless the Committee determines that exceptional circumstances exist which justify the grant of a
Performance Share Award at such other time, subject to the requirement that Performance Share
Awards cannot be granted after 31 December 2010.



6.3 Except as otherwise permitted in these Rules, Performance Share Awards will only Vest to the
extent the performance conditions applicable to Performance Share Awards, as set out in Schedule 1
to this Plan, have been satisfied.



7. Individual Limit For Performance Share Awards



The maximum aggregate value of Shares comprised in a Participant’s Performance Share Award will not
exceed, as at the Date of Grant of that Performance Share Award, 600% of the Participant’s basic
salary from the Group as at the Date of Grant.







Page 4









 







8. Vesting of Performance Share Awards 



8.1 The number of Performance Shares which may Vest under a Performance Share Award will be
determined by the Committee by reference to the extent to which the performance conditions imposed
under Rule 6.3 have been fulfilled, and any other conditions to which the Performance Share Award
is subject are fulfilled or waived.



8.2 Except as otherwise provided in these Rules, 50% of the number of Shares determined in
accordance with Rule 8.1, if any, will Vest on the Three Year Vesting Date. Shares to satisfy the
Vested Performance Shares will be transferred to Participants as soon as reasonably practicable
after that date along with any related Dividend Equivalents.



8.3 Except as otherwise provided in these Rules, 50% of the number of Shares determined in
accordance with Rule 8.1, if any, will become Deferred Performance Shares and Vest on the Five Year
Vesting Date, subject to the Participant remaining an employee of RE PLC, RE NV or a member of the
Group until that date. Shares to satisfy the Vested Deferred Performance Shares will be
transferred to Participants as soon as reasonably practicable after that date
along with any related Dividend Equivalents.



9. Grant of Matching Share Awards



9.1 Subject to the terms of these Rules, the Committee may grant a Matching Share Award to an
Executive in its absolute discretion provided that the Executive has not ceased to be an employee
of the Group and is not under notice before the Date of Grant of the Matching Share Award, unless
the circumstances set out in Rule 13.3 apply, in which case the Executive may be granted a Matching
Share Award.



9.2 A Matching Share Award may only be granted during the period of 42 days commencing
on:-





	(a)	 	the day following the announcement of results for the Qualifying Companies for the
2012 financial year; or
	 
	(b)	 	the day following the lifting of any Dealing Restrictions which prevented the
granting of the Matching Share Award during the period described in (a) above,




unless the Committee determines that exceptional circumstances exist which justify the grant
of a Matching Share Award at such other time, subject to the requirement that Matching Share Awards
cannot be granted after 31 December 2013.



9.3 Except as otherwise permitted in these Rules, Matching Share Awards will only Vest to
the extent the performance conditions applicable to Matching Share Awards, as set out in Schedule 1
to this Plan, have been satisfied.



10. Individual Limit For Matching Share Awards



The number of Shares comprised in a Participant’s Matching Share Award is equal to the number of
Deferred Performance Shares, if any, and Personal Shares held by a Participant in the Plan at the
Date of Grant of the Matching Share Award.




Page 5









 







11. Vesting of Matching Share Awards



11.1 The number of Shares which Vest under a Matching Share Award will be determined by the
Committee by reference to the extent to which the performance conditions imposed under Rule 9.3
have been fulfilled, and any other conditions to which the Matching Share Award is subject, have
been fulfilled or waived. This number is subject to the Cap.



11.2 Except as otherwise provided in these Rules, Matching Shares, if any, will Vest on the Five
Year Vesting Date and will be transferred to Participants as soon as reasonably practicable after
that date along with any related Dividend Equivalents.



12. Entitlement to Dividend Equivalents



12.1 In addition to any Shares which a Participant becomes entitled to on the Vesting of a
Performance Share Award, a Matching Share Award or Deferred Performance Shares, the Participant
will, subject to Rule 12.3, also be entitled to a cash payment equal in value to the ordinary
dividends (excluding any associated tax credit) which would have been paid on the Vested Shares
during the following periods: (a) in respect of Vested Performance Shares, commencing on 1 January
2010 and ending on 31 December 2012,(b) in respect of Vested Matching Shares, commencing on 1
January 2013 and ending on 31 December 2014 and (c) in respect of Vested Deferred Performance
Shares, commencing on 1 January 2010 and ending on 31 December 2014, or ending on such earlier date
when Shares Vest under the Plan.



12.2 The cash payment to which the Participant becomes entitled under Rule 12.1:





	(a)	 	will be calculated (in such manner as the Committee sees fit) by reference to the currency of
payment of the underlying dividend (and paid in such currency as the Committee sees fit);
	 
	(b)	 	will be calculated without any entitlement to interest (or other type of investment return)
in the period between the dividend payment date and the Vesting Date;
	 
	(c)	 	will be paid (subject to such deductions as are required by law) within one month of the
relevant Vesting Date; and
	 
	(d)	 	will be calculated by reference to ordinary dividends and without regard to special dividends
or distributions or dividends-in-specie.




12.3 Instead of making a cash payment, the Committee may in its discretion satisfy any entitlement
to Dividend Equivalents arising in accordance with Rule 12.1 by transferring existing Shares with
an equivalent value (as determined at the relevant Vesting Date).



12.4 For the avoidance of doubt, any payment referred to in this Rule 12 does not represent an
entitlement to actual dividends on the underlying Shares, by reason of the Participant not being
beneficial owner of the Shares at that time.







Page 6









 







13. Cessation of employment 




Participant gives or receives Notice



13.1 Except as otherwise provided in these Rules, if the Participant gives or receives notice of
termination of his employment with RE PLC, RE NV or any member of the Group prior to the Three Year
Vesting Date or the Five Year Vesting Date (as applicable), any outstanding Performance Share
Award, Matching Share Award and entitlement to Deferred Performance Shares will lapse. If the
Participant has given notice, the lapse date is the date on which the Participant gave notice. If
the Participant has received notice, the lapse date is the Termination Date or such other date as
determined by the Committee.



13.2 Where Rule 13.1 applies, a Participant’s Personal Shares will be released from the Plan in
full as soon as reasonably practicable following the date notice has been received from the
Participant or the Termination Date as the case may be.




Approved Leavers



13.3 Except as otherwise provided in these Rules, where a Participant ceases to be an employee of
RE PLC, RE NV or a member of the Group by reason of:





	(a)	 	retirement with the consent of the Company;
	 
	(b)	 	injury, disability or ill-health; or
	 
	(c)	 	any other reason which the Committee, in its absolute discretion, determines,




before the Three Year Vesting Date, Rule 13.4 will apply and if he ceases to be so employed after
the Three Year Vesting Date but before the Five Year Vesting Date, Rule 13.5 will apply.



13.4 If a Participant ceases to be employed in accordance with Rule 13.3 before the Three Year
Vesting Date:





	(a)	 	a Performance Share Award will continue on a pro-rated basis. For these purposes, the
pro-rated Performance Share Award will be over such number of Shares as is determined by
multiplying the number of Shares originally comprised in the Performance Share Award by A/B
where A is the number of complete calendar months which the Executive was employed between 1
January 2010 and 31 December 2012 and B is 36;
	 
	(b)	 	50% of the pro-rated Performance Share Award will, to the extent that the relevant
performance conditions have been satisfied, Vest on the Three Year Vesting Date;
	 
	(c)	 	the remaining 50% of the pro-rated Performance Share Award will be subject to a further
pro-rating reduction by multiplying the number of Shares originally comprised in 50% of the
pro-rated Performance Share Award by A/B where A is the number of complete calendar months
which the Executive was employed between 1 January 2010 and 31 December 2014 and B is 60 and
will become Deferred Performance Shares. The Deferred Performance Shares will, except as
otherwise provided in the Rules, Vest on the Five Year Vesting Date. The balance of the 50%
of the pro-rated Performance Share




Page 7









 






	 	 	Award which does not become Deferred Performance Shares will Vest on the Three Year Vesting
Date;
	 
	(d)	 	for the avoidance of doubt, a Matching Share Award will be granted in accordance with Rules 9
and 10 over such number of Shares as is equal to the aggregate of the Deferred Performance
Shares and Personal Shares after the time pro-rating reductions provided for in this Rule
13.4; and
	 
	(e)	 	a pro-rated number of a Participant’s Personal Shares will be retained within the Plan. For
these purposes, the pro-rated number means such number of Shares as is determined by
multiplying the number of Personal Shares by A/B where A is the number of complete calendar
months which the Executive was employed between 1 January 2010 and 31 December 2014 and B is
60. The balance of the Participant’s Personal Shares will be released from the Plan as soon as
reasonably practicable following the Termination Date.




13.5 If a Participant ceases to be employed in accordance with Rule 13.3 after the Three Year
Vesting Date but before the Five Year Vesting Date:





	(a)	 	a Participant will remain entitled to a pro-rated number of Deferred Performance Shares. For
these purposes, the pro-rated number of Deferred Performance Shares will be determined by
multiplying the number of Deferred Performance Shares as determined at the Three Year Vesting
Date by A/B where A is the number of complete calendar months which the Executive was employed
between 1 January 2010 and 31 December 2014 and B is 60. The balance of the Deferred
Performance Shares will be released as soon as reasonably practicable following the
Termination Date;
	 
	(b)	 	a Matching Share Award will continue as a pro-rated Matching Share Award. For these
purposes, the pro-rated Matching Share Award will be over such number of Shares as is
determined by multiplying the number of Shares originally comprised in the Matching Share
Award by A/B where A is the number of complete calendar months which the Executive was
employed between 1 January 2010 and 31 December 2014 and B is 60. The balance of the Matching
Share Award will lapse;
	 
	(c)	 	the pro-rated Matching Share Award will, to the extent that the relevant performance
conditions have been satisfied, Vest on the Five Year Vesting Date; and
	 
	(d)	 	the pro-rated number of a Participant’s Personal Shares will be retained within the Plan.
For these purposes, the pro-rated number means such number of Shares as is determined by
multiplying the number of Personal Shares by A/B where A is the number of complete calendar
months which the Executive was employed between 1 January 2010 and 31 December 2014 and B is
60. The balance of the Participant’s Personal Shares will be released from the Plan as soon
as reasonably practicable following the Termination Date.




13.6 In such circumstances as the Committee may in its absolute discretion determine, the Committee
may vary the application of Rule 13.4 and Rule 13.5 to allow an Award to Vest over a pro-rated
number of Shares on such earlier date as it may determine, subject always to satisfaction of the
relevant performance conditions at that date. Shares will be transferred to the Participant as
soon as reasonably






Page 8









 







practicable following the Award Vesting in accordance with this Rule 13.6. Where Rule 13.6
applies, a Participant’s Personal Shares will be released from the Plan in full on the date on
which his Award Vests.




Where a Participant ceases to be an Executive but continues an employee within the Group



13.7 The Committee may determine that Rules 13.4 and 13.5 will apply where a Participant ceases to
be an Executive but continues to be an employee of RE PLC, RE NV or any member of the Group.




Death



13.8 Where a Participant ceases to be an employee of RE PLC, RE NV or a member of the Group by
reason of death, before the Three Year Vesting Date then Rule 13.9 will apply, and after the Three
Year Vesting Date but before the Five Year Vesting Date, Rule 13.10 will apply.



13.9 If a Participant ceases to be employed in accordance with Rule 13.8 before the Three Year
Vesting Date:





	(a)	 	a Performance Share Award will Vest, subject to performance at the date of death, over a
pro-rated number of Shares. The performance conditions will be assessed based on progress made
against targets at the date of death as determined at the Committee’s absolute discretion. For
these purposes, the pro-rated number of Shares will be such number of Shares as is determined
by multiplying the number of Shares as would otherwise Vest under the Performance Share Award
by A/B where A is the number of complete calendar months which the Executive was employed
between 1 January 2010 and 31 December 2012 and B is 36. Shares and related Dividend
Equivalents will be transferred to a Participant’s personal representatives as soon as
reasonably practicable following Vesting;
	 
	(b)	 	a Participant’s Personal Shares will be released from the Plan in full to his personal
representatives as soon as reasonably practicable following Vesting; and
	 
	(c)	 	, no Matching Share Award will be granted and there will be no entitlement to Deferred
Performance Shares.




13.10 If a Participant ceases to be employed in accordance with Rule 13.8 after the Three Year
Vesting Date but before the Five Year Vesting Date:





	(a)	 	a Matching Share Award will Vest, subject to performance at the date of death, over a
pro-rated number of Shares. The performance conditions will be assessed based on progress
made against targets at the date of death as determined at the Committee’s absolute
discretion. For these purposes, the pro-rated number of Shares will be such number of Shares
as is determined by multiplying the number of Shares under the Matching Share Award by A/B
where A is the number of complete calendar months which the Executive was employed between 1
January 2010 and 31 December 2014 and B is 60. Shares and related Dividend Equivalents will
be transferred to a Participant’s personal representatives as soon as reasonably practicable
following Vesting;




Page 9









 












	(b)	 	a Participant’s Personal Shares will be released from the Plan in full to his personal
representatives as soon as reasonably practicable following Vesting; and






	(c)	 	a Participant’s Deferred Performance Shares will Vest on the date of death and be
transferred, along with related Dividend Equivalents to the Participant’s personal
representatives as soon as reasonably practicable following Vesting.




13.11 The Committee has discretion to vary the application of Rules 13.8 to 13.10 and determine
that an Award should be treated as set out in Rules 13.3 to 13.5 instead.



14. Claw-Back Arrangements




Breach of Restrictive Covenants



14.1 If a Participant breaches any term of his post-termination restrictive covenants (such breach
to be determined by the Committee acting fairly and reasonably), any unvested Awards and Deferred
Performance Shares will lapse on the date of the Committee’s determination and the Committee may
require him to pay to the Company or any other member of the Group, within seven days of written
demand from the Company, the Relevant Amount (as defined in Rule 14.2 below).



14.2 The Relevant Amount is an amount equal to A minus both B and C where:



A is an amount equal to the pre-tax gain realised by the Participant in respect of any Awards,
Deferred Performance Shares and Dividend Equivalents in the period beginning six months before the
Termination Date and ending when the Participant’s restrictive covenants cease to apply. For these
purposes, the gain will be the sum of the market value of the Vested Shares when received by the
Participant and the related Dividend Equivalents, and such gain will be determined irrespective of
whether the Participant has sold or retained the Shares so acquired;



B is an amount equal to the tax and social security charges and liabilities incurred by the
Participant in respect of A; and



C is any payment of the Claw-back Amount, determined in accordance with Rule 14.4 below, in respect
of A.




Materially misstated financial or other data



14.3 If the Committee, within two years of, as the case may be, the Three Year Vesting Date or the
Five Year Vesting Date, considers in good faith that the Vesting of the relevant Award, the Vesting
of Deferred Performance Shares and/or the payment of Dividend Equivalents was determined on the
basis of materially misstated financial or other data (the Incorrect Award), it will, unless it
determines otherwise, recover the Claw-back Amount (as defined in Rule 14.4 below) by taking one or
more of the following actions:





	(a)	 	reduce any outstanding unvested Awards and/or Deferred Performance Shares by the Claw-back
Amount; and/or




Page 10









 












	(b)	 	require the Participant to pay to the Company, within thirty days of a written demand from
the Company, the Claw-back Amount.




14.4 The Claw-back Amount is the difference in value between (i) the Incorrect Award and (ii) the
Awards, Deferred Performance Shares and Dividend Equivalents, which would have Vested or been
payable had the correct data, as determined by the Committee acting fairly and reasonably, been
used. This may be expressed as a number of Shares or a monetary amount or a combination thereof, as
the Committee considers appropriate. In determining the Claw-back Amount, the Committee may take
into account such matters as it sees fit including, but not limited to:





	(a)	 	the difference between the number of Shares under the Incorrect Award and the number of
Shares the Committee considers should have Vested had the correct data been used;
	 
	(b)	 	any gain made by the Participant on the sale of Shares comprised in the Incorrect Award;
	 
	(c)	 	any tax and/or dealing costs incurred by the Participant in connection with the Incorrect
Award, and
	 
	(d)	 	whether the Participant has made a payment pursuant to Rules 14.1 to 14.3 which would take
account of Shares subject to an Incorrect Award.




14.5 By accepting an Award, a Participant will be bound by Rule 14 (i) notwithstanding that it
will only be applicable after the release of Shares under these Rules and (ii) whether or not the
essential terms of this Rule 14 have been separately notified to each Participant.



15. Change of Control of a Qualifying Company



15.1 Except as otherwise provided in these Rules, if any person:





	(a)	 	obtains Control of a Qualifying 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 that Qualifying Company;
	 
	(b)	 	becomes bound or entitled to acquire Shares under sections 979 and 983 of the Companies Act
2006 (or in relation to RE NV becomes entitled to acquire compulsorily Shares held by minority
shareholders); or
	 
	(c)	 	obtains Control of a Qualifying Company in pursuance of a compromise or arrangement
sanctioned by the Court under section 899 of the Companies Act 2006 (or in relation to RE NV
under any equivalent legislative provision in the Netherlands),




then any unvested Awards and /or entitlement to Deferred Performance Shares over Shares in that
Qualifying Company (but not those in the other Qualifying Company) will Vest within 30 days of the
relevant event subject to the relevant performance conditions as applicable. The performance
conditions will be assessed based on progress made against targets as at the date of the relevant
event as determined by the Committee. The number of Shares which Vest will be subject to a
pro-rating reduction in accordance with Rule 15.2 or 15.3 below.







Page 11









 







15.2 Where Rule 15.1 applies before the Three Year Vesting Date then the pro-rating reduction
applicable to a Performance Share Award will be determined by multiplying the number of Shares
under a Performance Share Award by A/B where A is the number of complete calendar months between 1
January 2010 and the date of the relevant event (but not exceeding 36) and B is 36. For the
avoidance of doubt, no Matching Share Award will be granted and there will be no entitlement to
Deferred Performance Shares.



15.3 Where Rule 15.1 applies after the Three Year Vesting Date but before the Five Year Vesting
Date then the pro-rating reduction applicable to a Matching Share Award and Deferred Performance
Shares will be determined by multiplying the number of Shares under a Matching Share Award or
Deferred Performance Shares (as applicable) by A/B where A is the number of complete calendar
months between 1 January 2010 and the date of the relevant event (but not exceeding 60) and B is
60.



15.4 Any Award and/or any Deferred Performance Shares over Shares in that Qualifying
Company which do not Vest as a result of the relevant event will lapse on the relevant event.



15.5 A Participant’s Personal Shares in that Qualifying Company will be released from the Plan in
full on or as soon as reasonably practicable after the date of the relevant event.



16. Change of Control of the Company



Except as otherwise provided in these Rules, the provisions of Rule 15 will apply with any
necessary changes in the event that any person (either alone or together with any person acting in
concert with him) obtains Control of the Company and the Shares comprised in Awards and Deferred
Performance Shares which may Vest will be Shares in both Qualifying Companies.



17. Compulsory Rollover on Internal Reorganisation 



17.1 Rules 15 and 16 will not apply if the purpose and effect of the change of Control or scheme of
arrangement is:





	(a)	 	to create a new holding company for the relevant Qualifying Company, such company having
substantially the same Shareholders and proportionate shareholdings as those of the Qualifying
Company immediately prior to the scheme of arrangement;
	 
	(b)	 	to give one Qualifying Company Control (directly or indirectly) of the other Qualifying
Company;
	 
	(c)	 	the person obtaining Control of the Company is one of the Qualifying Companies or a company
under the Control of one or both of them; or
	 
	(d)	 	the Company remains under the ultimate Control of the Shareholders of the Qualifying
Companies immediately prior to the relevant transaction affecting the Company.




17.2 If Rule 17.1 applies:







Page 12









 









	(a)	 	Awards and Deferred Performance Shares will not Vest on the relevant event;
	 
	(b)	 	an Award will instead be exchanged for an equivalent award over such shares as the Committee
determines appropriate;
	 
	(c)	 	Deferred Performance Shares will instead be exchanged for shares or cash and continue to be
subject to the Plan on such terms as the Committee determines appropriate; and
	 
	(d)	 	the Committee may make any modifications to the relevant performance conditions as it
determines appropriate.




17.3 The Committee may vary the application of this Rule 17 so that it applies to Awards and
Deferred Performance Shares over Shares in both Qualifying Companies or to Shares in only one
Qualifying Company.



17.4 Where Rule 17 applies, a Participant will not be treated as ceasing to be an employee of RE
PLC, RE NV or a member of the Group until he ceases to be employed by a company which is either the
relevant holding company or a subsidiary of the holding company (within the meaning of section 1159
of the Companies Act 2006).



17.5 For the avoidance of doubt, in Rules 15, 16 and 17, “Committee” means those people who were
members of the Committee immediately before the event by virtue of which the applicable Rule
applies.



18. Voluntary winding up



The provisions of Rule 15 will apply with such changes as may be necessary in the event that notice
is duly given of a resolution for a voluntary winding up of a Qualifying Company provided
that, all references in Rule 15 to the date of the relevant event will be treated as
references to the date on which notice is given for the voluntary winding-up of a Qualifying
Company.



19. Adjustment of awards



19.1 In the event of:





	(a)	 	any Capital Reorganisation; or
	 
	(b)	 	the implementation by a Qualifying Company of a demerger or the payment by a Qualifying
Company of a super-dividend which would otherwise materially affect the value of an Award
and/or Deferred Performance Shares,




the definition of Shares and the number of Shares in that Qualifying Company comprised in an Award
and/or Deferred Performance Shares may be adjusted in such manner as the Committee determines.



19.2 A Participant will in respect of his Personal Shares be treated in the same manner as any
other holder of Shares, except that (unless the Committee determines otherwise):





	(a)	 	in the event of a rights issue in respect of Personal Shares, the Participant (or other
nominee holding Personal Shares on his behalf) will be required to sell




Page 13









 






	 	 	sufficient rights nil-paid (at such time during the rights issue as the Committee thinks
fit) as will enable the Participant to acquire with the proceeds of sale the remainder of
the Participant’s rights entitlement PROVIDED THAT the Participant may elect to
take up in a personal capacity the rights that would have been sold (and such Shares will
not be subject to this Plan) subject to the Participant providing sufficient funds to give
effect to his obligation under the first part of this sub-paragraph (a);






	(b)	 	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 a Qualifying Company), the Committee will in its absolute discretion
determine whether such cash or securities will be released to the Participant or whether the
nominee holding Shares on behalf of the Participant will be required to apply that cash (or
the proceeds of sale of such securities), after allowing for tax thereon, in the purchase of
further Personal Shares to be held on behalf of the Participant.




20. Source of Shares



20.1 A Participant’s entitlement to Shares will be satisfied from purchases on a recognised stock
exchange. No new Shares will be issued or Shares transferred from treasury in connection with the
Plan.



21. Rights attaching to shares transferred pursuant to awards



21.1 All Shares transferred upon the Vesting of an Award and or Deferred Performance Shares will
rank pari passu in all respects with the Shares in issue at the date of Vesting except in respect
of any rights attaching to such Shares by reference to a record date prior to the date of Vesting.



21.2 Any Shares acquired by a Participant under this Plan will be subject to the articles of
association of the relevant Qualifying Company from time to time.



22. Administration and amendment 



22.1 The decision of the Committee will be final and binding in all matters relating to the Plan
including the exercise of any discretion under the Rules, the interpretation of the Rules and any
dispute relating to any matter in connection with the Rules.



22.2 The Committee may at any time discontinue the grant of further Awards or amend any of the
provisions of the Plan in any way it thinks fit and such changes may affect Awards already granted:
provided that:





	(a)	 	the Committee will not make any amendment that would materially prejudice the interests of
existing Participants except with their prior consent; and
	 
	(b)	 	no amendment to the advantage Participants may be made to:






	 	(i)	 	the definition of Executive;
	 
	 	(ii)	 	the maximum entitlement of a Participant under the Plan;
	 
	 	(iii)	 	the maximum limit on the number of Shares which can be awarded
under the Plan;




Page 14









 












	 	(iv)	 	the basis for determining a Participant’s entitlement to Shares
under the Plan and the terms on which they can be acquired;
	 
	 	(v)	 	the terms of Shares to be provided under the Plan;
	 
	 	(vi)	 	the adjustment provisions of Rule 19 of the Plan;






	 	 	without the prior approval of RE PLC in general meeting (and, if appropriate the prior
approval of RE NV in general meeting), except in the case of minor amendments to benefit
the administration of the Plan, to take account of a change in legislation or to obtain or
maintain favourable tax, exchange control or regulatory treatment for Participants, RE PLC,
RE NV or any member of the Group, or as otherwise permitted under these Rules; and
	 
	(c)	 	without prejudice to any provision of the Plan which provides for the lapse of an
Award, the Committee may not cancel an Award unless the Participant agrees in writing to such
cancellation.




23. General




Trustee funding



23.1 Any member of the Group may provide money to the trustees of any trust or any other person to
enable them or him to acquire Shares to be held for the purposes of satisfying Awards under the
Plan, or enter into any guarantee or indemnity for these purposes, to the extent not prohibited by
the provisions of the Companies Act 2006.




Discretionary nature of the Plan



23.2 The rights and obligations of a Participant under the terms and conditions of his office or
employment will not be affected by his participation in the Plan or any right he may have to
participate in the Plan.



23.3 Participation in this Plan does not imply any right to receive Awards on the same or any
other basis in any other year.



23.4 The terms of the Plan do not entitle the Participant to the exercise of any discretion in his
favour.



23.5 An individual who participates in the Plan waives all and any rights to compensation or
damages in consequence of the termination of his office or employment with any member of the Group
for any reason whatsoever insofar as those rights arise, or may arise, from his ceasing to have
rights under the Plan as a result of such termination or from the loss or diminution in value of
such rights. If necessary, the Participant’s terms of employment will be varied accordingly.




Changes to a Qualifying Company’s capital structure



23.6 The existence of any Award will not affect in any way the right or power of the Company, the
Qualifying Companies or their shareholders to make or authorise any or all adjustments,
recapitalisations, reorganisations or other changes in the Company’s or either of the Qualifying
Company’s capital structure, or any merger or consolidation of the Company or Qualifying Companies,
or any issue of shares,






Page 15









 







bonds, debentures, preferred or prior preference stocks ahead of or convertible into, or otherwise
affecting the Shares or the rights thereof, or the dissolution or liquidation of the Company or
Qualifying Companies or any sale or transfer of all or any part of their assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.




Notices



23.7 Any notice or other document which has to be given to a Participant under or in connection
with the Plan may be delivered or sent by post to him at his home address according to the records
of his employing company or sent by email or fax to any email address or fax number according to
the records of his employing company or, in either case, such other address as may appear to the
Company to be appropriate.



23.8 Notices sent by post to a Participant in the UK or US will be deemed to have been given two
days after the date of posting. However notices sent to a Participant in other countries will be
deemed to have been given on the seventh day after the date of posting.



23.9 Notices sent by email or fax, in the absence of evidence to the contrary, will be deemed to
have been received on the day after sending.



23.10 Any notice or other document required to be given to the Company under or in connection with
the Plan may be delivered or sent by post to it at its registered office (or such other place or
places as the Committee may from time to time determine and notify to Participants) or sent by
email or fax to any email address or fax number notified to the sender.




No transfer of Awards or Deferred Performance Shares



23.11 A Participant may not transfer, assign, charge or otherwise dispose of any Awards or Deferred
Performance Shares, or any rights in respect of them, except on the transmission of Awards or
Deferred Performance Shares on the death of a Participant to his personal representatives or the
assignment of an Award or Deferred Performance Shares, with the prior consent of the Committee,
subject to any terms and conditions the Committee imposes. Any such attempted transfer will result
in the lapse of the Award or Deferred Performance Shares as applicable.



Awards non-pensionable



23.12 Awards and Dividend Equivalents under the Plan are not pensionable.




Payment of Stamp Duty



23.13 The Company, or where the Committee so directs any member of the Group, will pay the
appropriate stamp duty on behalf of Participants in respect of any transfer of Shares on the
Vesting of Awards and/or Deferred Performance Shares.




Data Protection



23.14 By accepting the grant of an Award, a Participant consents to the holding and processing of
personal data provided by him to the Company, a Qualifying Company or any member of the Group, and
any other persons for all purposes related to the






Page 16









 







operation of the Plan and acknowledges that the personal information may be transferred to, and
stored at, a destination outside the European Economic Area (“EEA”), and may also be processed by
staff operating outside the EEA who work for the Company, a Qualifying Company, a member of the
Group or for one of their service providers. The Company will take all steps reasonably necessary
to ensure that a Participant’s personal data is treated securely under appropriate contractual
arrangements.




Governing Law



23.15 This Plan will be governed by, and construed in accordance with, the laws of England.





Page 17












 





SCHEDULE 1




Performance Conditions



General



1. The following provisions shall apply to Awards granted under the Plan.



2. Performance targets applicable to the Performance Share Award will be measured after the end of
the 2012 financial year of the Qualifying Companies and the performance targets applicable to the
Matching Share Award will be measured after the end of the 2014 financial year of the Qualifying
Companies.



3. There are three separate measures: a Relative Total Shareholder Return measure (TSR Measure), a
Return on Invested Capital measure (ROIC Measure) and an Adjusted Earnings per Share measure (EPS
Measure).



4. The determination of vesting levels under the three measures is subject to the Cap.




The TSR Measure



5.1 The vesting of one third of the Performance Share Award is subject to the TSR ranking of Reed
Elsevier measured over the three financial years of the Qualifying Companies 2010 to 2012 and the
vesting of one third of the Matching Share Award is subject to the TSR ranking of Reed Elsevier
measured over the five financial years of the Qualifying Companies 2010 to 2014. In respect of each
type of award the portion subject to the TSR Measure is referred to as the “TSR Tranche”.



5.2 Three distinct comparator groups will be used — a Sterling Comparator Group, a Euro Comparator
Group and a US Dollar Comparator Group. The TSR performance of RE PLC ordinary shares (based on RE
PLC’s London listing) will be measured against the Sterling Comparator Group, the TSR performance
of RE NV ordinary shares (based on RE NV’s Amsterdam listing) will be measured against the Euro
Comparator Group; and the TSR performance of RE PLC ADRs and RE NV ADRs (based on the New York
listing) will be measured against the US Dollar Comparator Group. The TSR performance will be
measured separately against each comparator group and each ranking achieved will produce a payout,
if any, in respect of one third of the TSR Tranche. The proportion of the TSR Tranche that vests
will be the sum of the payouts achieved against the three comparator groups.



5.3 TSR will be measured in local currency.



5.4 Total Shareholder Return for any company shall be the percentage increase or decrease in the
market value of a share over the relevant performance period and shall take account of dividends
and other distributions paid in the course of that period (each such dividend being deemed to be
reinvested in the shares of each relevant company from the date of payment of the dividend to the
last day of the relevant performance period),



5.5 Each comparator group comprises companies which were selected on the following basis: -







Page 18









 









	 	•	 	they are included in a relevant market index as at 31 December 2009— FTSE100 for
the Sterling Comparator Group; Euronext100 and the DAX30 for the Euro Comparator
Group; and the S&P500 for the US Dollar Comparator Group;
	 
	 	•	 	are nearest in size to Reed Elsevier in terms of market capitalisation;





     excluding:




	 	•	 	companies with mainly domestic revenues (as they do not reflect the global nature
of the Qualifying Companies’ customer base);
	 
	 	•	 	those engaged in extractive industries (as they are exposed to commodity cycles);
and
	 
	 	•	 	financial services companies (as they have a different risk/reward profile).




Relevant listed global peers operating in businesses similar to those of Reed Elsevier not
otherwise included are added to the relevant comparator group.



Set out below are the comparators included in each group:




	 	 	 	 	 
	STERLING	 	 	 	US DOLLAR COMPARATOR
	COMPARATOR GROUP	 	EURO COMPARATOR GROUP	 	GROUP
	AGGREKO

	 	ACCOR
	 	3M
	ASTRAZENECA

	 	ADIDAS
	 	ADOBE SYSTEMS
	AUTONOMY CORP.

	 	AHOLD
	 	AGILENT TECHS.
	BAE SYSTEMS

	 	AIR LIQUIDE
	 	AIR PRDS. & CHEMS.
	BRITISH AIRWAYS

	 	AKZO NOBEL
	 	AMAZON.COM
	BRITISH AMERICAN
TOBACCO

	 	ALSTOM
	 	ANALOG DEVICES
	BUNZL

	 	ASML HOLDING
	 	APPLIED MATS.
	BURBERRY GROUP

	 	BASF
	 	AVON PRODUCTS
	COBHAM

	 	BMW
	 	BAXTER INTL.
	COMPASS GROUP

	 	CARREFOUR
	 	BECTON DICKINSON
	DMGT

	 	CHRISTIAN DIOR
	 	CATERPILLAR
	DIAGEO

	 	DAIMLER
	 	COLGATE-PALMOLIVE
	EXPERIAN

	 	DEUTSCHE POST
	 	CORNING
	GLAXOSMITHKLINE

	 	EADS
	 	CUMMINS
	INTERCONTINENTAL HOTELS

	 	ESSILOR INTL.
	 	DEERE
	IMPERIAL TOBACCO GROUP

	 	HEINEKEN
	 	DOW CHEMICAL
	INFORMA

	 	HERMES INTL.
	 	DUN & BRADSTREET
	INMARSAT

	 	K + S
	 	E. I. DU PONT DE NEMOURS
	INTERNATIONAL POWER

	 	LAFARGE
	 	EBAY
	INTERTEK GROUP

	 	LAGARDERE GROUPE
	 	EMERSON ELECTRIC
	INVENSYS

	 	LINDE
	 	FICO
	JOHNSON MATTHEY

	 	LVMH
	 	FORD MOTOR
	KINGFISHER

	 	MAN
	 	GENZYME
	NATIONAL GRID

	 	METRO
	 	H.J. HEINZ
	PEARSON

	 	MICHELIN
	 	ILLINOIS TOOL WORKS
	RECKITT BENCKISER GROUP

	 	PERNOD-RICARD
	 	JOHN WILEY
	REXAM

	 	PHILIPS ELTN. KONINKLIJKE
	 	JOHNSON CONTROLS
	ROLLS-ROYCE GROUP

	 	PORTUGAL TELECOM SGPS
	 	JUNIPER NETWORKS
	SABMILLER

	 	PPR
	 	LIFE TECHNOLOGIES
	SAGE GROUP

	 	RENAULT
	 	MCDONALDS
	SHIRE

	 	SAINT-GOBAIN
	 	MCGRAW-HILL
	SMITH & NEPHEW

	 	SAP
	 	MICRON TECHNOLOGY






Page 19









 






	 	 	 	 	 
	STERLING	 	 	 	US DOLLAR COMPARATOR
	COMPARATOR GROUP	 	EURO COMPARATOR GROUP	 	GROUP
	SMITHS GROUP

	 	SCHNEIDER ELECTRIC
	 	MOTOROLA
	THOMAS COOK GROUP

	 	SUEZ ENVIRONNEMENT
	 	NEWS CORP
	TUI TRAVEL

	 	THALES
	 	NIKE
	UNILEVER (LSE)

	 	THYSSENKRUPP
	 	NVIDIA
	UNITED BUSINESS MEDIA

	 	TNT
	 	PACCAR
	VODAFONE

	 	UNILEVER (AEX)
	 	PPG INDUSTRIES
	WOLSELEY

	 	VALLOUREC
	 	SPECTRA ENERGY
	WPP

	 	VEOLIA ENVIRONNEMENT
	 	TEXAS INSTS.
	 

	 	VOLKSWAGEN
	 	THOMSON REUTERS (NYSE)
	 

	 	WOLTERS KLUWER
	 	UNITED TECHNOLOGIES
	 

	 	 	 	YUM! BRANDS





5.6 Any changes in the comparators groups as a result of delisting or consolidation will be
treated in accordance with the methodology agreed by the Committee at its sole discretion from time
to time. In determining the methodology to be applied, the Committee will have due regard to market
practice, ensure a consistent application of the agreed methodology and be open and transparent
about the methodology applied.



5.7 The TSR ranking against the US Dollar Comparator Group will be calculated using the weighted
average of the TSRs of the RE PLC ADRs and the RE NV ADRs over the relevant period of measurement.



5.8 The number of Shares in each third of the TSR Tranche which are capable of Vesting will be
calculated as follows and will be added together to determine the total number of Performance
Shares and Matching Shares, within the TSR Tranche of each type of Award, which are capable of
Vesting:




	 	 	 	 	 	 	 	 	 
	 	 	Performance Share	 	Matching Share
	 	 	Awards —	 	Awards —
	 	 	performance	 	performance
	 	 	measured to the end	 	measured to the end
	 	 	of 2012	 	of 2014
	TSR ranking within	 	Vesting percentage of	 	Vesting percentage of
	the relevant TSR	 	each third of the TSR	 	each third of the TSR
	comparator group	 	Tranche	 	Tranche
	Below Median
	 	 	0	%	 	 	0	%
	Median
	 	 	30	%	 	 	30	%
	Upper quartile (top
25th percentile)
	 	 	100	%	 	 	100	%





5.9 Vesting is on a straight-line basis for ranking between median and upper quartile. 50% of the
Shares comprised in a Performance Share Award that are capable of Vesting will be designated as
Deferred Performance Shares and will only Vest as provided for by the Rules.



5.10 The averaging period applied for TSR measurement purposes for the Performance Share Award is
the six months before the start of the financial year of the Qualifying Companies in which the
Performance Share Award is granted and the last six months of the financial year of the Qualifying
Companies ending 31 December 2012. In respect of the Matching Share Award, the averaging period
applied for TSR measurement purposes is the six months before the start of the financial year of
the Qualifying Companies in which the Performance Share Award is




Page 20









 







granted and the last six months of
the financial year of the Qualifying Companies ending 31 December 2014.




The ROIC Measure



6.1 The Vesting of one third of the Performance Share Award and one third of the Matching Share
Award relates to the percentage return on invested capital of the combined businesses of the
Qualifying Companies. The vesting of the Performance Share Award relates to the percentage ROIC of
the combined businesses of the Qualifying Companies for the financial year of the Qualifying
Companies ending 31 December 2012 and is subject to the 2012 ROIC exceeding the 2009 ROIC,
calculated on the same basis. The Matching Share Award is subject to the percentage ROIC of the
combined businesses of the Qualifying Companies for the financial year of the Qualifying Companies
ending 31 December 2014. In respect of each type of award, the portion subject to the ROIC Measure
is referred to as the ‘ROIC Tranche’.



6.2 The following definitions are relevant for ROIC:





	 	(i)	 	Invested capital = arithmetic average of the opening and closing capital
employed stated before financing and tax balances for the combined businesses of the
Qualifying Companies adjusted for major acquisition timing for the financial year
with all cumulative amortisation and impairment charges for acquired intangible
assets and goodwill added back and excluding the gross up to goodwill in respect of
deferred tax liabilities established on the acquisition of intangible assets
retranslated at the average and hedge exchange rates applicable to the financial
year ended 31 December 2009. In addition, any exceptional restructuring and
acquisition related charges (net of tax) over the performance period are capitalised
for these purposes and the effect of changes in exchange rates and movements in the
net pension deficits are excluded.
	 
	 	(ii)	 	Return = adjusted operating profit for the combined businesses of the
Qualifying Companies before amortisation and impairment of acquired intangible
assets and goodwill, exceptional restructuring and acquisition related charges and
grossed up to exclude the equity share of taxes in joint ventures and further
adjusted to exclude movements in the net pension financing credit, after applying
the effective rate of tax used for adjusted earnings calculations and using exchange
rates to match those used in the calculation of invested capital.






In order to ensure that the performance score achieved is a fair reflection of underlying
business performance, the Committee retains discretion to determine the treatment of major
disposals and acquisitions that require Board approval. Any significant adjustments made to
the final performance score will be disclosed to shareholders.



Page 21









 




6.3 The number of Performance Shares and Matching Shares comprised in the ROIC Tranche of each type
of award which are capable of Vesting will be determined as follows:




	 	 	 	 	 
	Performance Share	 	Matching Share	 	 
	Awards — performance	 	Awards — performance	 	 
	measured in respect	 	measured in respect	 	Vesting percentage of
	of 2012	 	of 2014	 	ROIC Tranche
	ROIC

	 	ROIC	 	 
	Below 10.2%
	 	Below 10.7%
	 	0%
	10.2%
	 	10.7%
	 	60%
	11.2% or above
	 	12.7% or above
	 	100%





6.4 Vesting is on a straight-line basis for performance between the minimum and maximum levels.
50% of the Shares comprised in a Performance Share Award that are capable of Vesting will be
designated as Deferred Performance Shares and will only Vest as provided for by the Rules.




The EPS Measure



7.1 The vesting of one third of the Performance Share Award relates to the average growth in
Adjusted Earnings per Share at constant currencies (Adjusted EPS) of the Qualifying Companies over
the two financial years of the Qualifying Companies, 2011 and 2012. However, for any part to vest,
Average Adjusted EPS Growth must be positive over the three financial years of the Qualifying
Companies ending 31 December 2012. The vesting of one third of the Matching Share Award is subject
to Adjusted EPS over the two financial years 2013 and 2014. In respect of each type of Award, the
portion subject to the EPS Measure is referred to as the ‘EPS Tranche’.



7.2 The following definitions apply in respect of Adjusted EPS:





	 	(i)	 	Adjusted EPS Growth = the arithmetic mean of the growth in Adjusted EPS
at constant currencies achieved by the Qualifying Companies over a relevant
financial year;
	 
	 	(ii)	 	Average Adjusted EPS Growth = the average of the Adjusted EPS Growth over
the relevant period of measurement;
	 
	 	(iii)	 	Adjusted Earnings = adjusted reported earnings. Adjustments include
amortisation and impairment of acquired intangible assets and goodwill, exceptional
restructuring and acquisition related charges, gains/losses on business disposals
and other non-operating items, related tax effects and movements in deferred tax
balances not expected to crystallise in the near term. The Committee retains
discretion to adjust for changes in the net pension financing credit;
	 
	 	(iv)	 	Adjusted Earnings Per Share = Adjusted Earnings divided by the Number of
Shares




Page 22









 












	 	(v)	 	Number of Shares = weighted average number of shares in issue excluding
shares held in treasury or by the Reed Elsevier Group plc Employee Benefit Trust;
and
	 
	 	(vi)	 	Constant currencies = refers to measurement at constant rates of exchange
using the prior full year average and hedge rates.




The Committee has discretion to adjust this definition of Adjusted EPS to take account of any
changes in recognised accounting standards or practice, fiscal regime or capital structure, to
ensure consistent measurement and accountability.



7.3 The number of Performance Shares/Matching Shares in the EPS Tranche of each type of award which
are capable of Vesting will be determined as follows:




	 	 	 	 	 
	Performance Share Awards	 	Matching Share Awards	 	 
	— performance measured in	 	— performance measured in	 	Vesting percentage
	respect of 2011 and 2012	 	respect of 2013 and 2014	 	of EPS Tranche
	Average Adjusted EPS Growth
	 	Average Adjusted EPS Growth	 	 
	Below 5% per annum
	 	Below 7% per annum
	 	0%
	5% per annum
	 	7% per annum
	 	60%
	9% or above per annum
	 	13% or above per annum
	 	100%





7.4 Vesting is on a straight-line basis for performance between the minimum and maximum levels. 50%
of the Shares comprised in a Performance Share Award that are capable of Vesting will be designated
as Deferred Performance Shares and will only Vest as provided for by the Rules.




Determining satisfaction of targets at end of performance period



8.1 The performance period for the Performance Share Award are the financial years of the
Qualifying Companies 2010 to 2012, with performance being determined in respect of this Award after
the end of the 2012 financial year of the Qualifying Companies. The performance period for the
Matching Share Award are the financial years of the Qualifying Companies 2013 and 2014 in respect
of the EPS and ROIC Tranches of the Award and the five financial years ending 31 December 2014 in
respect of the TSR Tranche. Performance in respect of this Award will be determined after the end
of the 2014 financial year of the Qualifying Companies.



8.2 Following the end of the relevant Performance Period the Committee shall:





	 	(a)	 	calculate and confirm with the Auditors the Adjusted EPS and ROIC over the
relevant Performance Periods; and
	 
	 	(b)	 	arrange for a reputable provider of such information to calculate and report
to the Committee on the TSR performance. If at the end of the relevant Performance
Period, any of the companies in the comparator groups have undergone a change in
circumstances (such as delisting, the cessation of trading or merger with another
company) the Committee may determine the appropriate treatment for such companies in




Page 23









 






	 	 	 	accordance with its stated methodology for the purpose of determining its TSR and TSR
ranking.





Adjustments



9. The Committee may make such adjustments to the performance conditions applicable to outstanding
Awards as it considers appropriate to take account of any factors which are relevant in the opinion
of the Committee and in particular if there is
an event which causes it to consider that the performance conditions are no longer a fair measure
of performance. The amended performance conditions shall be at least as challenging as the one
originally set.



10. The Committee has discretion to adjust the definition or method of calculation of Adjusted EPS
and ROIC (or any other applicable term or measure) as set out in this Schedule to take account of
any changes in recognised accounting standards or practice, fiscal regime or capital structure, to
ensure consistent measurement and accountability.



11. Without prejudice to the generality of paragraphs 9, 10 and 12, the Committee may, in
consultation with the Auditors, make the following adjustments in relation to the calculations to
be carried out in accordance with this Schedule:





	 	(a)	 	any adjustments it considers appropriate if an event occurs giving rise to an
adjustment of Awards under Rule 19 of the Plan;
	 
	 	(b)	 	any adjustments it considers appropriate to the calculation of TSR for each
of the companies in the Comparator Group to take account of local market factors; and
	 
	 	(c)	 	any adjustments it considers appropriate if there is any modification in the
calculation of TSR or in relation to the relevant international accounting standard
used to calculate EPS or ROIC.





Overriding Power



12. In determining the level of vesting of any Award under the Plan, the Committee will take into
account the overall business performance of RE PLC, RE NV and the Group over the relevant
performance period and any other factors that it considers appropriate and may modify the vesting
of awards if it considers that such a modification would result in a fairer outcome.







Page 24









 








SCHEDULE 2




US Participants


This Schedule was adopted by the directors of Reed Elsevier Group plc on 21 April 2010.



The Rules of the Plan apply to Awards and Deferred Performance Shares granted to US Participants
under this Schedule subject to the modifications contained in this Schedule.





	 	(A)	 	In this Schedule, terms shall have the same meaning as in Rule 1 of the Rules
unless modified by this Schedule.
	 
	 	(B)	 	Retirement. Rule 1 is revised by the addition of the following definition of
“Retirement” for US Participants:
	 
	 	 	 	Retirement means, for purposes of the Vesting of Awards under this Schedule in
relation to a US Participant (including the Vesting of Deferred Performance
Shares), circumstances which the Committee determines on a case by case basis and
in its absolute discretion to constitute retirement (irrespective of whether or
not applicable retirement eligible criteria have been met);
	 
	 	(C)	 	US Participant. Rule 1 is revised by the addition of the following
definition of “US Participant”:
	 
	 	 	 	US Participant means a Participant who is subject to United States taxation by
reason of being a United States national, or resident in the United States for
United States tax purposes;
	 
	 	(D)	 	Release of Shares. Rules 8.2, 8.3, and 11.2 shall have the additional
requirement that the Shares shall be transferred to the US Participant by 15 March of
the calendar year following the calendar year in which Vesting occurs.
	 
	 	(E)	 	Dividend Equivalent — Cash Payment. Rule 12.1 shall have the additional
requirement that any cash payment to the US Participant under this Rule shall in all
instances be released no later than March 15 of the year following the year in which
Vesting occurs.
	 
	 	(F)	 	Dividend Equivalent — Shares in Lieu of Cash. Rule 12.3 shall have the
additional requirement that if the Committee determines that it shall satisfy an
entitlement to Dividend Equivalents arising in accordance with Rule 12.1 by delivering
Shares with an equivalent value, such Shares shall be transferred to the US
Participant within 30 days of the relevant date of Vesting.
	 
	 	(G)	 	Cessation of Employment (Approved Leavers — Rule 13.4). If Rule 13.4
applies to a US Participant, such US Participant’s Deferred




Page 25









 






	 	 	 	Performance Shares will Vest on the Termination Date and the Company shall procure
the transfer of Shares deliverable to the US Participant by 15 March of the
calendar year following the calendar year in which the Participant’s Termination
Date occurs.






	 	(H)	 	Cessation of Employment (Approved Leavers — Rule 13.5). If Rule 13.5
applies to a US Participant, such US Participant’s pro-rated Deferred Performance
Shares will Vest on the Termination date and the Company shall procure the transfer of
Shares deliverable to the US Participant by 15 March of the calendar year following
calendar year in which the Participant’s Termination Date occurs.
	 
	 	(I)	 	Cessation of Employment (Approved Leavers — Rule 13.6). If Rule 13.6
applies to a US Participant, the Company shall procure the transfer of the pro-rated
Shares deliverable to the US Participant by 15 March of the calendar year following
the calendar year in which the Award Vesting occurs.
	 
	 	(J)	 	Cessation of Employment (Death). If Rule 13.9 or 13.10 applies to a US
Participant, the Company shall procure the transfer of Shares deliverable to the US
Participant’s personal representative under Rule 13.9 or 13.10 (as the case may be) no
later than 15 March of the calendar year following the calendar year in which the US
Participant’s death occurs.
	 
	 	(K)	 	Change of Control/Voluntary Winding Up. In any instance in which Rules 15,
16 or 18 apply to a US Participant, the Company shall procure the transfer of Shares
deliverable to the US Participant by 15 March of the calendar year following the
calendar year in which Vesting occurs.
	 
	 	(L)	 	Application of Code Section 409A. Although neither the Committee nor any
member of the Group guarantees any particular tax treatment to a US Participant,
Awards and Deferred Performance Shares granted pursuant to this Schedule are intended
to be exempt from Section 409A of the Code under the exception for short-term
deferrals set forth in Section 1.409A-1(b)(4) of the United States Income Tax
Regulations (which requires, in the case of an employer with a fiscal year ending 31
December, that Shares in payment of an award be transferred to the US Participant no
later than March 15 of the calendar year following the calendar year in which the
Award or Deferred Performance Share is no longer subject to a substantial risk of
lapsing) and shall be limited, construed and interpreted in accordance with such
intent.






Page 26