City grandee asked to mediate in LSE crisis

The London Stock Exchange Group's board has called in a top City law firm to represent it

By Mark Kleinman, City Editor

A City grandee whose former roles included the deputy chairmanship of HSBC Holdings has been drafted in for secret talks aimed at defusing the boardroom crisis at the owner of the London Stock Exchange.

Sky News has learnt that Sir Simon Robertson met the activist fund manager agitating for the reinstatement of the company's chief executive last week to assess whether a compromise deal could be agreed.

Sources said on Monday night that Sir Simon had been asked to mediate by Donald Brydon, the London Stock Exchange Group's (LSEG) chairman, and its other non-executive directors.

Sir Simon's talks with Sir Christopher Hohn, who runs The Children's Investment Fund Management (TCI) and wants to see Mr Brydon removed from his job, represented a last-ditch effort to avert a shareholder meeting that will take place before Christmas.

The board of LSEG faces a deadline of this Thursday to publish a circular in which it will explain to shareholders why it announced last month that Xavier Rolet would retire next year as the company's chief executive.

:: LSE drafts in law firm as Rolet feud escalates

Xavier Rolet has been chief executive of the London Stock Exchange since 2009
Xavier Rolet has been chief executive of the London Stock Exchange since 2009

The document's release is viewed by many of the participants in one of the City's biggest corporate governance crises for years as a "point of no return" for Mr Brydon and Mr Rolet.

‎The LSEG's board has called in Schillings, a top City law firm, to represent it as a public showdown in December looms.

Sir Simon's talks with Sir Christopher are not understood to have resulted in any signal of a compromise, suggesting that the EGM is now inevitable unless Mr Brydon decides to fall on his sword.

The grandee, who also chaired Rolls-Royce Holdings‎ and was a top investment banker at Goldman Sachs, is thought to have reported back on his discussion to senior regulators at the Bank of England, as well as the LSEG's non-executives.

Sir Simon's involvement was on a one-off basis, and he is not expected to have any ongoing role in the crisis engulfing the Exchange-owner.

Weekend press reports suggested that TCI was confident of gaining widespread shareholder support for the motions to reinstate Mr Rolet and sack Mr Brydon, but senior City insiders are sceptical that the hedge fund will win either vote.

The LSEG's nominations committee is continuing its search for Mr Rolet's successor, with headhunter Egon Zehnder International supervising the process.

The hunt has been made increasingly urgent by the row over Mr Rolet's future, because he is expected to leave immediately if TCI loses its battle to reinstate the Frenchman.

The Financial Times reported last week that David Warren, the LSEG's chief financial officer, was ‎being lined up as an interim successor if Mr Rolet departed in the short term.

Several LSEG non-executive directors had begun to privately acknowledge that their tenure will also become untenable if Mr Brydon is ousted at the forthcoming EGM.

The LSEG announced last month that Mr Rolet would step down in 2018 after serving for almost a decade, a period in which he has won plaudits for the way he has positioned the company at the heart of the world's financial markets infrastructure.

The row sparked by TCI's protests at Mr Rolet's "retirement" came as an even greater surprise to the City because he had planned to leave in any case if a merger between the LSE and Germany's Deutsche Boerse – which was ultimately blocked by regulators this year – had been completed.

Sir Chris said in a letter to the board that he had received "no satisfactory answer" from Mr Brydon about the reasons for Mr Rolet's removal.

The hedge-fund boss subsequently wrote to Mr Brydon again, urging him to waive a confidentiality agreement relating to the circumstances of Mr Rolet's resignation.

Last week, he poured further fuel on the fire by issuing a veiled threat to sue LSEG board members over the fracas.
Insiders have said that it would be bizarre if the board had stood in the way of Mr Rolet distancing himself from TCI's campaign.

The LSE said in response to TCI's original letter that it had "followed a proper governance process to plan an orderly succession for the CEO".

It added: "The FCA (Financial Conduct Authority) was kept informed throughout the process and emphasised the importance of the plan for an orderly succession.

"Xavier Rolet will be providing input into the process to identify his successor and is focused on his role as CEO until his successor is appointed."

The FCA is understood to have expressed concern about the escalating situation given the vital role the LSE performs in the infrastructure of financial markets.

City sources said the Treasury was also being kept updated on the situation, which has erupted at an important moment in the Brexit negotiations, with rival financial capitals attempting to lure much of London's lucrative clearing business.

The LSEG's non-executives, Sir Simon and TCI all declined to comment.

More business news

  • Previous article Victoria Beckham nets £30m expansion cash
  • Next article Yo! Sushi has taste for ex-Pizza Express‎ boss

Source –

Leave a Comment