The board of the London Stock Exchange (LSE) has today accused activist hedge fund TCI of “damaging” the bourse's reputation, through its efforts to reinstate outgoing boss Xavier Rolet.
In a letter seen by City A.M., the board accused TCI and its boss Sir Christopher Hohn of launching “a public, concerted and highly personalised campaign” which was “calculated to upset the smooth execution of the succession plan”.
The board's comments came as Rolet, who unexpectedly announced last month that he would leave the LSE next year, announced this morning he would step down immediately. He said the “unwelcome publicity” surrounding his departure had “not been helpful to the company”.
The surprise announcement meant TCI's call for a shareholder vote on reinstating Rolet “is now therefore without merit”, the board said.
Responding to the LSE, Hohn wrote: "We intend to respond to your letter tomorrow."
The hedge fund had also called for a vote on removing LSE chairman Donald Brydon, but was told that “the board is unanimously of the view that Donald Brydon is the right person to lead the board until 2019”. Brydon has said he will not stand again for the position of chairman at next year's general meeting.
The LSE asked Hohn to withdraw the requests regarding Rolet and Brydon – and his call for a shareholder meeting – by 1pm. TCI released a statement saying it had received the LSE's letter, but would reply "tomorrow". Unless Hohn does step back from the battle, the LSE will have until Friday to announce the date of a shareholder meeting.
The dispute surrounding Rolet's departure from the chief executive position flared up after the LSE board announced a succession plan, but failed to give a satisfactory answer regarding Rolet's reasons for leaving.
TCI argued he had driven value creation at the LSE and removing him would be detrimental. It instead called for the ejection of chairman Brydon.
But Rolet was under increasing pressure to vacate his role even before Bank of England governor Mark Carney said yesterday that he could not “envision a circumstance where the CEO stays on beyond the agreed period” in the succession plan.
The LSE will now accelerate its search for a new chief executive, and will hope that Rolet's departure will draw a line under the issue.