CEO quits as LSE tries to draw line under management row
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[November 29, 2017]
By Huw Jones
LONDON (Reuters) - London Stock Exchange
CEO Xavier Rolet is stepping down immediately and its chairman will not
seek re-election, as the exchange tries to draw a line under a row with
a top shareholder over management succession.
Rolet had previously said he would leave at the end of 2018, but
activist hedge fund TCI accused Chairman Donald Brydon of pushing him
out and called a shareholder meeting to try to reverse the decision and
The LSE board has asked TCI to say by 1300 GMT on Wednesday if it will
withdraw its shareholder meeting request to "avoid further disruption
and potential damage to the company".
The row - coming at a tricky time for the LSE as it risks losing a chunk
of its derivatives clearing business to erstwhile merger partner
Deutsche Boerse <DB1Gn.DE> due to Brexit - had dragged in the Bank of
Rolet's departure after 8-1/2 years in charge could trigger fresh
speculation that a rival exchange such as ICE <ICE.N> could bid for the
LSE, though analysts say any mega-bourse deal would face intense
scrutiny by competition authorities.
In a statement issued by the LSE on Wednesday, Rolet said there had been
a "great deal of unwelcome publicity" surrounding his departure "which
has not been helpful to the company."
"At the request of the board, I have agreed to step down as CEO with
immediate effect. I will not be returning to the office of CEO or
director under any circumstances," he added.
The LSE said Brydon had also indicated he would not stand for
re-election at the company's annual general meeting in 2019, and that
Chief Financial Officer David Warren would replace Rolet on an interim
The Financial Conduct Authority agreed to Brydon staying on until 2019
to ensure an orderly succession, the LSE said.
TCI had no immediate comment on the announcement.
The LSE said Brydon and the board believed that in 2019, under a new
chairman, "it would be in shareholders' interests to have a new team at
the helm to steer the future progress of the company."
However, UBS analyst Michael Werner said Rolet's immediate departure
created significant uncertainty over future strategy and posed a
challenge in defending market share from Deutsche Boerse. UBS has a
"neutral" rating on LSE shares.
Simon Brazier, a fund manager at Investec Asset Management, which is a
small shareholder in LSE, said the exchange is now in "a worse position
than before this saga started."
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The Chief Executive of the London Stock Exchange, Xavier Rolet poses
for photographers, in London February 13, 2009. REUTERS/Andrew
At 1208 GMT, the stock was down 1.5 percent at 3,743 pence, in a UK blue-chip
index <.FTSE> 0.5 percent lower. LSE shares have risen around five-fold under
Rolet is credited with turning the LSE into a diversified exchange group by
acquiring a controlling stake in LCH, one of the world's biggest clearing
houses, and expanding the bourse's activities in stock indexes.
But the Frenchman and former investment banker was unable to seal a merger with
Deutsche Boerse, the exchange's third attempt at an Anglo-German tie up.
Relations between Rolet and Brydon had become strained, several people who have
worked at the exchange said.
"It would be easier getting into the cockpit of a plane flying over a city than
getting Rolet and Brydon into the same office," a person who has worked with
Rolet would effectively sideline senior management, making it harder for a new
CEO to build a team, the former colleague said.
One dispute between Rolet and the board centered on who would represent the LSE
on an important City advisory group on Brexit. But supporters of Rolet say that
turning around the exchange in such a major way inevitably ruffled feathers.
"Rolet has been an outstanding CEO and has created incredible value for
shareholders and positioned the business in a remarkable way," said Alasdair
Haynes, CEO of rival Aquis Exchange.
TCI had called on the Bank of England (BoE) and the Financial Conduct Authority
to replace Brydon.
But in a strong rebuff to TCI founder Christopher Hohn, BoE Governor Mark Carney
said on Tuesday the LSE's succession plans should remain in place and that he
was "mystified" by the spat, effectively sealing Rolet's fate.
The LSE board accused Hohn in a letter on Wednesday of pursuing a "highly
The LSE said if TCI does not withdraw its call for a shareholder meeting, it
will publish a circular no later than Nov. 30 confirming among other things the
date of the general meeting at which the proposed resolution or resolutions will
(Additional reporting by Simon Jessop, Ben Martin and Maiya Keidan; Editing by
Mark Potter and David Evans)
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