Rolet being forced out of London Stock Exchange, says big investorHeat Profit
One of the London Stock Exchange Group’s biggest shareholders has demanded the resignation of its chairman, alleging that chief executive Xavier Rolet is being forced to leave the LSE against his wishes.
The Children’s Investment Fund, a $17bn hedge fund that owns 5 per cent of LSE stock, wrote on Friday to Donald Brydon, the chairman, to demand an extraordinary meeting of shareholders to retain Mr Rolet as head of the exchange.
In a letter circulated by Chris Hohn, TCI’s founder, to other shareholders and seen by the Financial Times, the fund also called on Mr Brydon to step down, alleging that it was Mr Brydon’s decision “to remove [Mr Rolet] as chief executive”.
The LSE confirmed that it had received the letter and said that Mr Rolet would be providing input into the process to identify his successor. “The LSE Group has followed a proper governance process to plan an orderly succession for the CEO,” it said in a statement.
TCI’s calls for shareholder action were driven by the LSE’s announcement in mid-October that Mr Rolet would retire and leave the LSE by the end of 2018, bringing to an end a nine-year tenure that has transformed one of the City’s most high-profile institutions.
In that period he has turned the LSE from a perpetual target for bids from overseas rivals to the world’s fifth-largest exchange by Market capitalisation. TCI’s call has been backed by the $18bn Investment fund Egerton, another long-term LSE shareholder and supporter of Mr Rolet.
Xavier is one of the best chief executives in London, has created huge value for shareholders. It is not clear he wants to retire
John Armitage, Egerton chief Investment officer, said: “Xavier is one of the best chief executives in London, has created huge value for shareholders. It is not clear he wants to retire. If he wishes to go and make wine that is fine, but if the board has let him go for any other reason that is a huge dereliction of duty.”
TCI, run by London activist Sir Chris, has been a shareholder throughout Mr Rolet’s period in charge, during which time the LSE’s Market capitalisation has gone from £800m to nearly £14bn.
TCI has built a reputation as one of Europe’s largest and most feared activist Investors after waging a string of campaigns against companies in Europe, Asia and the US.
Last year, it called for an overhaul of executive pay at Volkswagen following the diesel emissions scandal, and this year battled against the French aerospace company Safran to restructure its acquisition of Zodiac.
Mr Rolet had been due to step down this year as part of the merger with Deutsche Börse but the deal was blocked by European antitrust authorities in March, prompting him to stay on.
In a letter to Mr Brydon, Mr Hohn referred to a meeting that TCI held with Mr Brydon this week to discuss Mr Rolet’s departure and “understand the basis for your decision to remove him as chief executive. We received no satisfactory answer”, Mr Hohn wrote.
“We seek your resignation and ask the board to immediately begin the search for a new chairman,” he added.
He said that Mr Rolet was only 57 years old “and could easily serve an additional five years”. TCI is calling for Mr Rolet’s contract to be extended until 2021.