Round one to Brydon as ISS backs LSE chair

Round one to Brydon as agency backs LSE’s under-fire chairman

Round one to Brydon as agency backs LSE’s under-fire chairman

ISS has recommended that LSE Group investors oppose TCI’s bid to oust chairman Donald Brydon in a note seen by Sky News.

14:52, UK,
Wednesday
06
December
2017

Donald Brydon (r) pictured with Xavier Rolet at the LSE in 2015. Pic: Royal Mail
Image:
Donald Brydon (r) pictured with Xavier Rolet at the LSE in 2015. Pic: Royal Mail

The under-fire chairman of the London Stock Exchange Group has received a welcome boost from an influential voting advisor 13 days ahead of a shareholder meeting that will decide his future.

Sky News has obtained a copy of a report by Institutional Shareholder Services (ISS) which recommends that investors in the LSE’s owner oppose a resolution aimed at ousting Donald Brydon from the board.

ISS’s endorsement of Mr Brydon could prove an important factor in securing his tenure until his planned exit in 2019, even as The Children’s Investment Fund Management (TCI) continues to agitate for his immediate departure.

In its note, ISS, which carries significant weight among fund managers, said support for TCI’s proposal was “not warranted”.

“Support for the removal of the Chairman would equate to a strong judgement call against the board, and simultaneously looking for a new chairman and CEO would be far from ideal.

“On the other hand, keeping Donald Brydon as chairman for a limited time would provide stability and continuity and he has substantial experience hiring CEOs.

“Support for the chairman is also a vote of confidence for the Board and the corporate governance of the Company.

“Indeed, the decision to change the CEO is one that may determine not only the legacy of Donald Brydon but also his fellow directors.

“In summary, ISS considers that the dissident has not met the burden of proving that the immediate removal of Donald Brydon from the board will be beneficial for the company and its shareholders as a whole. “

Other proxy advisers such as Glass Lewis are also yet to reveal their advice ahead of the EGM.

TCI has been fighting a campaign for the last month to get Mr Brydon sacked and reinstate Xavier Rolet, the exchange group’s chief executive.

Xavier Rolet has been chief executive of the London Stock Exchange since 2009
Image:
Xavier Rolet was chief executive of the LSE Group for eight years

It was forced to abandon the latter part of its efforts last week when Mr Rolet stepped down a year early at the request of the company’s board.

In a presentation to shareholders published on Monday, TCI accused Mr Brydon of presiding over the dismissal of “a world-class CEO without providing any good reasons”.

The activist also said that Mr Brydon had a long track record of firing chief executives at companies he has chaired, and warned that his continued presence at the LSE Group would be an impediment to the recruitment of Mr Rolet’s successor.

People close to the LSEG said that TCI had inaccurately characterised the terms of Mr Rolet’s exit, and said that Mr Brydon’s planned departure in 2019 would be the best outcome for the company.

Last week, it wrote to TCI to accuse it of “damaging” one of the UK’s most important companies by calculating “to upset the smooth execution of its succession plan” by carrying out a “public, concerted and highly personalised campaign”.

The company’s directors accused TCI of “negatively impacting Xavier Rolet’s relationships with the board and has led to pressure on the company’s relationships with its shareholders and other stakeholders”.

The company said that David Warren, its chief financial officer, would become interim chief executive after Mr Rolet’s sudden exit.

However, Sky News understands that Mr Warren has no interest in taking the job on a permanent basis.

Mr Rolet had been widely lauded for his transformation of the business into a key pillar of global markets infrastructure.

However, the row sparked by TCI’s protests at Mr Rolet’s “retirement” came as an even greater surprise to the City because he had planned to leave in any case if a merger between the LSE and Germany’s Deutsche Boerse – which was ultimately blocked by regulators this year – had been completed.‎

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