Xavier Rolet, chief executive of the London Stock Exchange © FT montage / PA
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The activist shareholder demanding the removal of the chairman of the London Stock Exchange Group has raised the pressure by insisting the company lifts what the investor alleges is a “confidentiality agreement” placed on the exchange’s departing chief executive.
Chris Hohn, founder of The Children’s Investment Fund, which owns 5 per cent of LSE Group, sent a letter on Tuesday to Donald Brydon, chairman, calling for him to waive a confidentiality agreement TCI said had been signed by Xavier Rolet, chief executive, covering the nature of his departure.
The LSE announced last month that Mr Rolet would bring an end to his tenure next year after nine years, sparking allegations from TCI last week that Mr Rolet was being forced out against his will. The fund claimed in the letter that Mr Brydon had told it on October 31 that Mr Rolet had signed the agreement with the LSE Group.
Sir Chris told the Financial Times that if there was no progress on the issue he would call an extraordinary meeting early next week to remove Mr Brydon as chairman. The LSE Group was not available for comment when contacted by the FT. Under UK rules TCI holds enough shares to call an EGM to force Mr Brydon’s removal.
“Confidentiality agreements have come under scrutiny . . . and now their use is being questioned in the corporate world,” Sir Chris told the Financial Times. “It is surprising the regulators have not forced the company to remove the confidentially agreement because the LSE is a systemically important financial institution”.
LSE Group responded to TCI’s call for the resignation of Mr Brydon by saying it had followed a “proper governance process” for finding a successor to Mr Rolet. It did not immediately respond to TCI’s other allegations. Mr Rolet has not commented on the situation since TCI sent its first letter last week.
Mr Rolet, a former Goldman Sachs, Dresdner Kleinwort Benson and Lehman Brothers banker, is due to step down by the end of next year. During his tenure, the LSE’s position as a crucial City institution has been rehabilitated. In part through a series of acquisitions, its share price has risen from about 600p to more than £37. However a plan to merge the LSE with its rival, Deutsche Börse, failed in March, after being blocked by European antitrust regulators.
Egerton Capital, another significant LSE Group shareholder, has told the FT it supports Mr Rolet staying in his post and wants the company to give full disclose on why he is stepping down.
Mr Brydon and Mr Rolet are understood to be meeting the company’s largest investors separately this week to discuss the situation.