LONDON — London Stock Exchange Group PLC on Friday appointed a 20-year veteran of Goldman Sachs Group Inc. as its new chief executive, filling a crucial leadership gap following the abrupt departure of former CEO Xavier Rolet.
David Schwimmer, who most recently headed the U.S. investment bank’s market-structure group and global metals and mining investment-banking operation, is set to join LSE on Aug. 1, when he will also join the board.
The 49-year-old American takes the reins at a position of strength for LSE: Its stock price has risen steadily over the past five years, as earnings benefited from Mr. Rolet’s bets on derivatives clearing and the growth of index investing. The challenge now is to prove he can maintain that momentum following disappointment among some major shareholders over his predecessor’s departure.
The hiring of a seasoned investment banker signals that deal making could be a priority. That said, LSE recently missed out on a big opportunity to expand into the vast market for trading U.S. government debt after Chicago-based CME Group Inc. agreed last month to buy NEX Group PLC for about $5.4 billion. The London-based company owns the biggest electronic trading platform for U.S. Treasury bonds, BrokerTec.
An LSE spokesman said that Mr. Schwimmer wasn’t immediately available for comment. In a statement, Mr. Schwimmer said LSE “has multiple opportunities for further attractive growth across its market leading capital formation, information services and post trade business.”
The challenges Mr. Schwimmer faces are made more difficult by the uncertain political and economic environment resulting from Britain’s prolonged divorce from the European Union. At the same time, LSE’s lucrative business clearing trades in derivatives and other securities faces new competition. Last year, clearinghouse Eurex, which is owned by Germany’s Deutsche Börse AG, announced plans to set up a profit-sharing system to try to win market share from LSE’s majority-owned LCH Group Ltd.
LSE announced in October that Mr. Rolet would leave the London-based exchange operator by the end of this year, capping off a tenure of close to 10 years, while providing for a smooth transition for leadership change. However, TCI Fund Management Ltd., a U.K. activist investor, upended that plan by calling in November for a shareholder vote to keep Mr. Rolet in place beyond 2018 and replace LSE Chairman Donald Brydon. To try to diffuse the battle, Mr. Rolet left that month, and Mr. Brydon said he wouldn’t seek re-election at LSE’s annual meeting in 2019.
TCI, which owns about 5% of LSE and is headed by Sir Christopher Hohn, argued that LSE had effectively fired Mr. Rolet under the “guise of succession planning.” LSE defended its actions saying it had followed proper governance procedures.
Mr. Hohn declined to comment Friday.
LSE said it would pay Mr. Schwimmer an annual salary of GBP775,000 ($1.1 million), plus bonuses and incentive pay based on performance.
Write to Ben Dummett at ben.dummett@wsj.com
Source : MTV
