Directors’ remuneration report

Introduction from Remuneration Committee Chairman

The economic environment in which Reed Elsevier does business changed substantially during the course of 2008 and, inevitably, the Committee’s agenda during the year evolved to reflect the changing climate. In the first half of 2008 we reviewed a number of longer term strategic issues: primarily the performance measures used in our long term incentives, and the role and effectiveness of our share option programme. We increased the performance targets to be applied to long term incentive awards made in 2008 and reconfirmed our continued use of share options.

The Committee continues to keep all aspects of executive remuneration under review, given the developing business and governance environment.

Remuneration arrangements play an important role in the successful execution of Reed Elsevier’s talent strategy. We successfully recruited Ian Smith as CEO to succeed Sir Crispin Davis upon his retirement in March 2009. Gerard van de Aast left Reed Elsevier when his role ceased to exist following a restructuring of Reed Business. His severance arrangements reflect the application of mitigation and the standard rules of our incentive plans.

Notwithstanding Reed Elsevier’s strong performance during 2008 and positive outlook for 2009, in view of the wider economic climate, the Committee decided not to increase the salaries for executive directors with effect from 1 January 2009.

As in previous years, our approach to preparing this report has been to meet the highest standards of disclosure, whilst aiming to produce a clear and understandable report. Following the publication in December 2008 of the amended Dutch Corporate Governance Code, the Committee reviewed the current level of disclosure and believes that it already complies with the substance of the requirements. During 2009, the Committee will continue to monitor its approach to disclosure, as more detailed guidance and clarification on the amended Code provisions becomes available.

Mark Elliott
Chairman, Remuneration Committee

This report describes how Reed Elsevier applies the Principals of good governance relating to directors’ remuneration. It has been prepared by the Remuneration Committee (the Committee) of Reed Elsevier Group plc in accordance with Schedule 7A of the Companies Act 1985 and the Dutch Corporate Governance Code.

The Directors’ Remuneration Report was approved by the boards of Reed Elsevier Group plc, Reed Elsevier PLC and Reed Elsevier NV and will be submitted to shareholders for an advisory vote at the Annual General Meeting of Reed Elsevier PLC. It contains the disclosures required for financial year 2008 under the Dutch Corporate Governance Code and Dutch legislation.

The audited parts of the Directors’ Remuneration Report

In compliance with the UK Directors’ Remuneration Report Regulations 2002, and under Title 9, Book 2 of the Civil Code in the Netherlands the following elements of this report have been audited: the table entitled ‘Transfer value of accrued pension benefits’; the tables showing ‘Aggregate emoluments’ and ‘Individual fees of non-executive directors’ in Remuneration and share tables; the tables on ‘Individual emoluments of executive directors’ and ‘Directors’ shareholdings in Reed Elsevier PLC and Reed Elsevier NV’; and the section ‘Share-based awards in Reed Elsevier PLC and Reed Elsevier NV’.