Xavier Rolet said he will step down immediately as chief executive officer of London Stock Exchange (LSE) Group after a weeks-long spat between the board and a hedge-fund activist that demanded he stay in the role.
Mr Rolet resigned following a request from the board, and will be replaced in the interim by the chief financial officer David Warren, the exchange said on Wednesday. The LSE also asked activist shareholder TCI Fund Management, which owns 5 per cent of the stock, to withdraw its demand for a general meeting. The shares fell 2 per cent.
It is the second announcement regarding Mr Rolet’s exit. On October 19, LSE said Mr Rolet was due to step down at the end of 2018. TCI chief Christopher Hohn then campaigned to keep him, calling on the LSE chairman Donald Brydon to leave instead while demanding a shareholder meeting on the matter. Mr Brydon will not stand for re-election in 2019, LSE said on Wednesday.
“Since the announcement of my future departure on 19 October, there has been a great deal of unwelcome publicity, which has not been helpful to the company,” Mr Rolet said. “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.”
The 58-year-old became LSE chief executive in May 2009 after a career in trading that started in the 1980s at Goldman Sachs. Under Mr Rolet, LSE’s stock has risen almost sixfold.
His profile grew when he agreed to sell the LSE to Deutsche Boerse, a plan that would have created a behemoth with combined market capitalisation of some US$30 billion. The $14bn takeover was blocked on regulator concerns it would have created a "de facto monopoly”.
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In an unusual move, Bank of England governor Mark Carney waded into the argument, saying yesterday that the company should clarify the issue soon given the LSE’s important role in global derivatives markets. LSE’s dominant position in clearing has made that business a political football among politicians after the Brexit vote. In Wednesday’s statement, LSE said that it had kept the Bank of England and the Financial Conduct Authority informed of its succession plans since late September.
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 Thursday confirming the date of the meeting. It will also contain potentially negative details about Mr Rolet’s management style that the board will use to protect itself against accusations it wrongly forced the chief executive to leave. The meeting must take place before Christmas.
TCI declined to comment on Wednesday.
Wednesday’s announcement will hopefully “draw a line under this unwelcome attention and enable the group to refocus its attention on executing its strategies”, said the Numis Securities analyst Jonathan Goslin. He said he holds Mr Rolet in “high regard“ and has found “this whole debacle somewhat bemusing”.
Mr 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. Mr Rolet, a Frenchman who grew up in Algeria, may still get a bonus for 2017, the company said.
LSE shares fell 2 per cent to 3,725 pence as of 8:51am in London trading. Morgan Stanley said in a note on Wednesday that the uncertainty will likely weigh on the stock in the near term.
LSE has rallied 28 per cent this year.
