Investors rebuke LSE over CEO's Refinitiv-related pay hike

Almost 24 per cent of votes were cast against the LSE’s decision to raise Schwimmer’s pay for 2020 by a quarter, prompting the exchange operator to acknowledge that “certain shareholders would have preferred the increase to have been phased in”.

Following the vote at the LSE’s annual shareholder meeting, held virtually, the company said it would consult shareholders and publish an update within six months.

The exchange operator added that it had undertaken extensive engagement with investors before increasing the pay of Schwimmer, a former Goldman Sachs banker who has led the LSE since 2018. The pay rise took Schwimmer’s total remuneration last year to £6.9 million, up from £2.5 million in 2019. Just over £4 million was related to long-term share incentives that will vest.

The company said the pay increase, which makes Schwimmer one of the best-paid chief executives in the FTSE 100, reflected the transformational effect of its $27 billion purchase of Refinitiv in 2019. Investors hailed the deal, sending LSE shares up sharply.

However, the stock has struggled since the LSE warned it March that it would incur £1 billion of expenses this year to integrate Refinitiv as well as prepare the sale of Borsa Italiana to rival Euronext. The unexpected announcement triggered the biggest one-day fall in LSE shares in 20 years.

ISS, a shareholder advisory group, urged investors to vote against the package because of the costs of integrating Refinitiv. The scale of the vote against Schwimmer came even though 28 per cent of LSE shares are owned by groups led by Blackstone and Thomson Reuters, which sold a majority stake in Refinitiv to the UK group. Thomson Reuters now owns 15 per cent of LSE. A further 7.6 per cent of LSE shares are owned by the Qatar sovereign wealth fund.

The LSE said on Wednesday that shareholders holding just over 85 per cent of the stock voted on the pay package. The company had earlier reported a 3.9 per cent rise in total income in the first quarter. Growth was largely driven by customers wanting pricing, reference information and benchmark data from FTSE Russell, the group’s index business.

LSE added that it had made about £40 million of cost savings since the purchase of Refinitiv and was on track to hit its target of making a quarter of a promised £350 million in savings by the end of the year. ■