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Activist and LSE brace as voting adviser ISS gives verdict on row

The battle over the future of the London Stock Exchange Group’s (LSEG) chairman will reach a potentially decisive moment on Tuesday when an influential agency issues its voting recommendation to investors.

Sky News understands that Institutional Shareholder Services (ISS) will advise the owners of LSEG whether to support or reject The Children’s Investment Fund Management (TCI)’s call for the ousting of Donald Brydon.

Sources said that ISS, which wields substantial power among institutional investors, would circulate its voting advice as early as Tuesday – 13 days ahead of an extraordinary general meeting convened to vote on Mr Brydon’s future.

The ISS advice will mark a milestone in one of the most extraordinary boardroom crises in recent City history, since the recommendations of such firms can shape the responses of as many as 25% of a public company’s shareholders.

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.

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 chief executive 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”.

“We very much regret that you chose this course of action,” they added.

“The FCA agrees that this is important and an appropriate way to achieve an orderly succession.”

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.‎

ISS declined to comment on its recommendation on Monday.


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