700,000 pounds payout as Davis quits Reed: Co-chairman of Anglo-Dutch publishing giant was unhappy with role in merged group

PETER Davis is likely to pick up about pounds 700,000 in compensation after quitting as co-chairman of Reed Elsevier, the Anglo-Dutch publishing giant, and as chairman of Reed International, its UK arm, following a disagreement about his role.

Last year Mr Davis, who was on a three-year rolling contract, earned pounds 636,592, including pounds 180,000 performance-related bonus. His payoff could have been as high as pounds 2m.

He will, however, benefit from extensive share options. At the time of the last balance sheet, 31 December, as well as 11,953 shares, he had 138,440 options granted under executive and save- as-you-earn share option schemes. In addition, he may receive more free options granted under a complex long-term incentive plan.

Mr Davis's sudden departure came as a shock to the City. He was widely credited with Reed's successful refocusing on publishing in the late 1980s and with the complex merger of Reed International and Elsevier in January 1993.

But he made it clear yesterday that he was unhappy with his role in the merged group. Under the terms of the merger, the two companies jointly own Reed Elsevier although both remain independently quoted.

The Reed Elsevier board wanted the group to be run collegiately by an executive committee. Within it the two co-chairmen, Peter Davis and Pierre Vinken, his Elsevier opposite number, would concentrate on strategy, management development and communications.

The other two members - Ian Irvine, deputy chairman of Reed International, and Loek van Vollenhoven, deputy chairman of Elsevier - would have been responsible for operational matters.

Mr Davis disliked his lack of operational control, and wanted a more unified company. 'It wasn't a row,' he said. 'It is the problem of trying to combine an Anglo- Saxon style of management with a Continental one.'

Nevertheless, he was at pains to stress that such a structure could work. 'There is nothing wrong with the structure,' he said. 'I just didn't want to do it that way.'

Mr Davis has been replaced by Mr Irvine, formerly chief executive of Octopus Books, bought by Reed in 1987, who becomes co- chairman of Reed Elsevier and chairman of Reed International. He will be on a one-year contract.

Nigel Stapleton, finance director, replaces Mr Irvine as Reed International's deputy chairman. John Mellon, chief executive of Reed Publishing Europe, joins the Reed Elsevier board to share operating responsibilities with Mr Vollenhoven.

Reed has also made it clear that Pierre Vinken will be succeeded by Herman Bruggink when he retires in April 1995. Mr Davis had been expected to take both roles, and some commentators saw the announcement as an equalisation of power - and styles - between Elsevier and Reed.

Mr Irvine emphasised that there would be no change in strategy at Reed Elsevier following Mr Davis's departure, and that it continued to be interested in acquisitions. He said two American groups, Ziff Communications, thought to be worth up to dollars 3bn, and Mead Data Central, estimated to be worth dollars 1bn, would be investigated as possible purchases.

He stressed Reed felt a collegiate approach would benefit the company. 'We have a very strong executive team. It isn't one person - it isn't even four people who run the company. We aren't a business that is about any one individual.'

News of the decision pushed the Reed International share price down sharply but it recovered to 750p, off 9p, once it became clear Mr Davis's departure was prompted by personal dissatisfaction.

(Photograph omitted)

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