LONDON (Reuters) - Activist investor TCI Fund Management called on Thursday for a shareholder meeting to vote on removing London Stock Exchange (LSE.L) Chairman Donald Brydon, saying the company had not explained why Chief Executive Xavier Rolet was leaving.
TCI said in a letter to the LSE that it also wanted the company to terminate its search for a new CEO and, if Rolet accepts, extend his tenure until 2021.
Activist investors typically push for CEOs to leave a company in order to make changes that benefit the share price, but under Rolet’s tenure the LSE’s stock has risen from around 6 pounds to 37 pounds.
“Xavier has been a very successful CEO of the London Stock Exchange and he’s created a lot of value for shareholders,” a top-25 shareholder told Reuters. “If he’s been forced out for personal reasons or for reasons with no justification, then it’s likely that shareholders will back him to stay. If there’s something more to it, then shareholders need to know.”
The LSE said on Oct. 19 that Rolet would step down by the end of 2018, just under a decade after he took charge.
The exchange must now arrange an extraordinary shareholder meeting (EGM) within three weeks or TCI, founded by British billionaire Chris Hohn, will conduct its own meeting within three months at the company’s expense, the hedge fund said.
TCI holds just over a five percent stake in the LSE, enough for it to be able to call such a meeting.
“We have spoken to the LSE and explained that we need more information in order to be able to assess the situation,” said the top-25 shareholder. “We only spoke to the investor relations guy and there wasn’t a lot he could say but he seemed to agree that they will need to say something at some stage.”
TCI first raised its complaints about Rolet’s planned exit in a letter to the LSE last Friday, in which it said Brydon and the board were trying to force the CEO out, an allegation denied by the exchange on Monday.
A subsequent letter to the LSE on Tuesday demanded the company let Rolet speak about his reasons for leaving and reiterated a threat to call an EGM if the company did not act.
A source close to LSE shareholder Egerton Capital said the hedge fund would back TCI in a resolution for Rolet to remain at the company.
A spokesman for the LSE declined to comment when contacted by Reuters.
($1 = 0.7607 pounds)
Reporting by Maiya Keidan and Simon Jessop; Editing by Rachel Armstrong and Mark Potter