In the best farces, everyone ends up losing. So it is at the London Stock Exchange Group, where the three principal characters will stagger from the stage as diminished figures.
Xavier Rolet, the exchange’s chief executive, will spend more time with his vineyard sooner than he expected. He had been set to leave at the end of next year but is now out of the door immediately.
He grumbles about “a great deal of unwelcome publicity, which has been unhelpful for the company” but he is an old City hand who should have known how the script would run. Regulators were bound to back the board in a power struggle at an important City institution. When Mark Carney, governor of the Bank of England, spoke on Tuesday about an “agreed” succession plan and how “everything comes to an end,” the game was up.
Rolet has enjoyed a glorious nine years at the LSE, in which time the share price has improved from £6 to £37, and a multimillion-pound payoff will ease his bruises, but it’s a messy way to go.
Donald Brydon, the exchange’s chairman, made the basic error at the outset of refusing to explain to shareholders why the board wished to change its chief executive. The omission was glaring and high-handed. In 21st century, you’ve got justify your decisions – not necessarily in full technicolour, but at least in outline. If Rolet’s management style was deemed a problem, there are ways of saying so without inviting uproar.
Brydon had boasted about running an “orderly” succession plan and has instead delivered a version that is as chaotic as they come. His own innings will be cut short in April 2019 as a result. Brydon has chaired many public companies, including Royal Mail at privatisation, but being battle-hardened was no use this time. The job was to prevent a battle breaking out.
As for Sir Christopher Hohn, boss of the the Children’s Investment Fund, his rebellion has spectacularly backfired. Hohn wanted to extend Rolet’s reign at the exchange until 2021, but instead he’s shortened it by a year.
It was fair for the hedge fund manager to protest about LSE’s failure to explain but Hohn’s tactics became bizarre in the later stages. The call for regulators to intervene to resolve the crisis was optimistic in the sense of being half-baked. Carney semi-intervened by speaking out – but he said the opposite of what Hohn wanted to hear.
Still, we’ve been treated to an entertaining City bust-up that has usefully reminded the audience that, even at successful companies, power struggles can lie around the next corner. It has been “mystifying,” as Carney put it, but it could also have been prevented. In future, boards may conclude that a little transparency on day one can prevent a lot of trouble later. That would be a good thing.
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