Xavier Rolet is stepping down immediately as chief executive officer of London Stock Exchange Group in one of the most high-profile UK spats between a board and an activist investor.
Rolet, who had said he would leave in 2018, resigned following a request from the board, the exchange said in a statement yesterday. TCI Fund Management has claimed Rolet last month was pushed out against his will and demanded he stay in the role, asking chairman Donald Brydon to go instead.
The board stood its ground, and reportedly planned to release a potentially negative dossier on Rolet to defend against the accusation by TCI chief Christopher Hohn. The 58-year-old CEO will be replaced in the interim by chief financial officer David Warren, while Brydon won’t stand for re-election in 2019, LSE said yesterday.
LSE also asked TCI, which owns 5% of the stock, to withdraw its demand for an emergency shareholder meeting on the matter. The shares fell as much as 2.4%.
Rolet became LSE CEO in May 2009 after a career in trading that started in the 1980s at Goldman Sachs Group Inc. Rolet’s departure marks an era marked by the UK’s Brexit vote and the collapse of a planned merger with Deutsche Boerse. Under Rolet, LSE became the world’s largest clearinghouse while the stock has risen almost sixfold.
“There has been a great deal of unwelcome publicity, which has not been helpful to the company,” Rolet said in the statement. “I will not be returning to the office of CEO or director under any circumstances. I am proud of what we have achieved during the past eight and a half years.”
In an unusual move, Bank of England governor Mark Carney waded into the argument. In what appeared to be a nudge to Rolet to leave, Carney yesterday noted Rolet’s contribution to the firm “but everything comes to an end.” The company should clarify the issue soon given the LSE’s important role in global derivatives markets, Carney said. LSE’s dominant position in clearing has made that business a political football among politicians after the Brexit vote.
Numis Securities analyst Jonathan Goslin said he found “this whole debacle somewhat bemusing.” Today’s announcement will hopefully “draw a line under this unwelcome attention and enable the group to refocus its attention on executing its strategies,” he said in an e-mail.
The ball is now in TCI’s court. If TCI fails to withdraw its demand for the general meeting, LSE said it will publish a shareholder circular no later than tomorrow confirming the date of the meeting. It will also contain potentially negative details about Rolet’s management style that the board will use to protect itself against accusations it wrongly forced the CEO to leave. The meeting must take place before Christmas.
TCI received a letter from LSE board members giving the fund a 1pm deadline today to respond to the exchange’s demand, according to a person with knowledge of the matter. TCI declined to comment yesterday.
Rolet leaves the LSE on the financial terms that were agreed at the time of the October announcement that he would quit in a little over a year. Rolet, a Frenchman who grew up in Algeria, may still get a bonus for 2017, the company said.
It’s the second blow for Rolet this year. The plan to sell the LSE to Deutsche Boerse would have created a behemoth with combined market capitalisation of some $30bn. The deal was blocked early this year on regulator concerns it would have created a “de facto monopoly.”
LSE shares fell 0.7% to 3,775 pence in London trading. Morgan Stanley analysts said in a note today that the uncertainty will likely weigh on the stock in the near term.








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