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LSE chair accuses TCI of ‘damaging’ campaign

The London Stock Exchange group has been embroiled in a boardroom wrangle

By Mark Kleinman, City Editor

The board of the London Stock Exchange Group (LSEG) ‎has accused the activist investor attempting to oust its chairman of "damaging" one of the UK's most important companies.

Sky News has obtained a letter to the founder of TCI, a hedge fund, in which the LSEG's directors said the investor had "calculated to upset the smooth execution of its succession plan" by carrying out a "public, concerted and highly personalised campaign".

The letter was sent on a morning of high drama in the boardroom of a company‎ which could lay claim to being the most prestigious in the City.

After a weeks-long effort by TCI to reinstate Xavier Rolet, the LSEG's chief executive, by handing him a new long-term contract, the Frenchman said he would leave with immediate effect and "under no circumstances" remain as a director.

Donald Brydon, the chairman, has agreed to step down at the company's annual meeting in 2019 after recruiting and overseeing the transition to Mr Rolet's successor.

TCI has requisitioned an extraordinary general meeting to oust Mr Brydon, halt the process of seeking a new chief executive and handing Mr Rolet a deal to stay on until 2021.

In the letter sent on Wednesday to Sir Christopher Hohn, TCI's founder, the LSEG board asked him to respond to its request to abandon the EGM by 1pm.

The company's directors accused TCI's campaign of "negatively impacting Xavier Rolet's relationships with the board and has led to pressure on the company's relationships with its shareholders and other stakeholders".

"We very much regret that you chose this course of action," they added.

TCI could pursue its desire to stage an EGM with the aim of removing Mr Brydon immediately, but this would lead to the publication on Thursday of a circular expected to contain details of previous boardroom tensions.

Xavier Rolet (left) and Donald Brydon (second left)
Xavier Rolet (left) and Donald Brydon (second left)

"From the outset, the [Financial Conduct Authority] has emphasised the importance of orderly succession," the LSEG board said in its letter.

"We have discussed with the FCA the board's strong preference for Donald Brydon to remain as chairman until the 2019 AGM in order to ensure a successful transition to a new CEO.

"The FCA agrees that this is important and an appropriate way to achieve an orderly succession."

The company said that David Warren, its chief financial officer, would become interim chief executive after Mr Rolet's sudden exit.

The Frenchman, who has been widely lauded for his transformation of the business into a key pillar of global markets infrastructure, had been expected to remain for another year.

In their letter to Sir Christopher, the exchange group's directors said that Mr Brydon, Mr Warren and other senior colleagues were open to meeting the activist on Wednesday morning.

They added that Mr Brydon had the board's unanimous support.

City sources said that comments made by Mark Carney, the Bank of England Governor, earlier this week had been crucial in persuading Mr Rolet to step down immediately.

Mr Carney said he was "mystified" by the boardroom crisis and that he could not envisage a chief executive remaining in place beyond a departure date agreed by a company's directors.

Earlier t‎his week, Sky News revealed that Sir Simon Robertson, a City grandee whose former roles included the deputy chairmanship of HSBC Holdings, had been drafted in to mediate between the warring factions.

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.

The LSEG declined to comment on the letter to Sir Christopher.

TCI also declined to comment.

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