U.K. Activist TCI Fund Demands LSE Group Retain CEO--Update

U.K. activist investor TCI Fund Management Ltd. is threatening to call a shareholder vote for the removal of the London Stock Exchange Group PLC's chairman if the exchange operator's chief executive Xavier Rolet isn't allowed to stay in his role beyond the end of 2018.

The move serves as the latest example of investor activism in Europe with companies such as Swiss chemicals producer Clariant AG, consumer-goods giant Nestlé SA, Dutch paint company Akzo Nobel NV and London-based miner BHP Billiton PLC all facing high-profile tussles with shareholders agitating for change.

Last month, the LSE said Mr. Rolet would leave the company by the end of next year, bringing the curtain down on a successful tenure of more than nine years. Under his leadership, the LSE's market value surged to almost EUR14 billion ($18.3 billion) from EUR800 million, in part benefiting from Mr. Rolet's acquisition of index-services providerFrank Russell Co. in 2014 and the growth in demand for exchange-traded funds.

In a Nov. 3 letter to Donald Brydon, the LSE's chairman, TCI alleges that Mr. Rolet was effectively fired "under the guise of 'succession planning,'" and his departure will result in "significant value destruction." The hedge fund, which owns more than 5% of the company, said that Mr. Rolet, who is 57 years, old, could serve another five years or more, according to the letter, which was signed by Sir Christopher Hohn, head of the London-based hedge fund.

If Mr. Rolet isn't allowed to stay on in his current role, TCI warned that it will call a shareholder vote on the removal of Mr. Brydon as a way for investors to show their support for the board retaining Mr. Rolet as chief executive.

TCI confirmed the contents of the letter. A LSE spokesman declined to comment and said that neither Mr. Rolet nor Mr. Brydon were available for comment.

Write to Ben Dummett at ben.dummett@wsj.com

Last month, the LSE said Mr. Rolet would leave the company by the end of next year, bringing the curtain down on a successful tenure of more than nine years. Under his leadership, the LSE's market value surged to almost EUR14 billion ($18.3 billion) from EUR800 million, in part benefiting from Mr. Rolet's acquisition of index-services provider Frank Russell Co. in 2014 and the growth in demand for exchange-traded funds.

In a Nov. 3 letter to Donald Brydon, the LSE's chairman, TCI alleges that Mr. Rolet was effectively fired "under the guise of 'succession planning,'" and will result in "significant value destruction." The hedge fund, which owns more than 5% of the company, said that Mr. Rolet, who is 57 years, old, could serve another five years or more, according to the letter, which was signed by Sir Christopher Hohn, head of the London-based hedge fund.

The LSE acknowledged receipt of TCI's letter, but defended the exchange operator's actions leading up to the announcement of Mr. Rolet's planned departure. The LSE "has followed a proper governance process to plan an orderly succession for the CEO," a company spokesman said in an emailed statement.

A LSE spokesman said that neither Mr. Rolet nor Mr. Brydon were available for comment.

Write to Ben Dummett at ben.dummett@wsj.com

(END) Dow Jones Newswires

November 03, 2017 19:33 ET (23:33 GMT)