Did the board of the London Stock Exchange demand that its chief executive quit against his wishes? This simple question, you would assume, could be answered with little fuss. All that is required is an answer from either the chairman, Donald Brydon, or the chief executive himself, Xavier Rolet.
Yet, more than a fortnight after the LSE announced that Rolet will leave at the end of next year, nobody wants to speak clearly. The silence makes one think the Children’s Investment Fund (TCI) is on to something. It is the hedge fund and long-standing LSE shareholder that claims that Rolet has been hustled unhappily towards the exit under the guise of “succession planning”. It thinks a better plan would be to keep him.
There was certainly a weird aspect to how the LSE announced Rolet’s exit last month. As pointed out here at the time, the group applauded the chief executive’s “remarkable achievements” at length but didn’t find space to address the central question: if he’s so good, why’s he going?
It’s a fair question. Rolet is only 57 and his nine years as boss are widely regarded as a huge success. The share price has improved from 500p to £38 on his watch and the LSE these days is a broader-spread £14bn operation.
Now that TCI is threatening to call a meeting of shareholders to try to unseat Brydon, you’d expect the LSE to clarify its thinking. Instead, the exchange issued a defensive statement that danced around the subject by asserting that “a proper governance process” was followed to orchestrate “an orderly succession”. Sorry, but that doesn’t answer TCI’s point about why a succession was needed in the first place.
The affair would evaporate in an instant if Rolet declared that, actually, he wants to leave. He could say, for example, that nine years is a long inninings for a chief executive and that he wishes to spend more time with his vineyard; or he could argue that turnover in the boardroom is healthy; or he could say that the collapse of the LSE’s planned merger with Deutsche Börse earlier this year made next year a good time to go. But he hasn’t made any of those points publicly – and nor has the company explained itself.
TCI should keep pressing. It may turn out there is no mystery, but shareholders deserve better than the LSE’s lofty obfuscation.
Industrial strategy white paper needs to shed the woolly thinking
Brexit, understandably, dominates conversation between government and business, and did so again at the CBI’s conference on Monday. But let’s not forget about that big initiative arriving soon – the government’s all-singing industrial strategy, due to be unveiled alongside the budget later this month.
If excitement about this supposedly pioneering adventure is less than fevered, that’s because the government’s green paper in January was so muddled.
Are we heading down the US route, where government procurement favours the home team and universities and business are encouraged to form close ties? Or is the German approach – with its emphasis on research, development and training – deemed better? Or perhaps we’re going French and signing up to big infrastructure projects.
All three themes were present in January’s document but they came across as series of good intentions, as opposed to an actual strategy that might survive a change of government. On that score, the CBI makes a good suggestion: create an independent Industrial Strategy Office modelled on the Office for Budget Responsibility to report and advise on progress.
One advantage in this idea is that governments would be obliged to explain what they are hoping to achieve and what targets – on productivity, or whatever – they are willing to measured against. Some formal rigour might us also spare the tiresome spectacle of ministers reheating old announcements, or pulling in unrelated spending that would have happened anyway, and calling it an industrial strategy.
There were too many of those tricks in the green paper. The business secretary, Greg Clark, let’s hope, understands that a white paper that is equally woolly will be no use to anybody.
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