Listen to this article
Give us your feedback Thank you for your feedback.
What do you think?
It was a bizarre dispute but it was settled in a traditional City of London manner. Xavier Rolet’s departure as chief executive of the London Stock Exchange Group, despite a fierce hedge fund effort to keep him, was achieved by an implacable board of directors, backed by the governor of the Bank of England, Mark Carney.
This was a “reassertion of some old values”, one adviser reflected on Wednesday after the company announced that Mr Rolet will leave his post immediately. Mr Carney’s intervention on Tuesday, making clear that he backed the board and that “everything comes to an end” was quickly fulfilled.
There is a small consolation prize for Sir Chris Hohn, whose TCI Fund Management campaigned in support of Mr Rolet staying, and called for the resignation of Donald Brydon, chairman. Mr Brydon will step down in 2019 after overseeing the recruitment of a permanent successor to Mr Rolet.
But there is no mistaking the snub delivered by both the Bank of England and the company’s directors to Sir Chris. He demanded that regulators intervene to support Mr Rolet against Mr Brydon but achieved the opposite effect — the hastening of the chairman’s exit.
The stand-off had threatened to get even nastier, with Sir Chris first demanding to know precisely why the board wanted Mr Rolet to leave and then warning against “character assassination”. It would have been hard to balance the two, given that the directors were unhappy with Mr Rolet’s management style.
Instead, the City establishment, after an awkward struggle, just managed to keep a lid on the conflict, while resisting Sir Chris’s demand that shareholders should have the right to impose a chief executive. Many corporate advisers and directors regarded that as unacceptable.
Even more worrying was the idea that directors could in future have to explain publicly their reasons for appointments that shareholders do not like. That could force them to disclose details about how executives work together and interact with boards, rather than keeping them private.
“I am mystified by the debate,” Mr Carney said, and many others were alarmed. It was time for the City to close ranks.