London Stock Exchange owner braces for backlash as advisor urges pay revolt

16 April 2021, 09:41 | Updated: 16 April 2021, 11:03

The odds of a major revolt over the London Stock Exchange Group (LSEG) boss's pay package have shortened after an influential advisory group recommended opposing it.

Sky News has learnt that Institutional Shareholder Services (ISS) has urged investors to vote against LSEG's remuneration report following its decision to hand chief executive David Schwimmer a 25% increase in his base salary.

The recommendation means a substantial minority of shareholders in the company are likely to vote against Mr Schwimmer's pay deal, according to City sources.

If a big revolt materialises, it would be the latest in a series of rebellions at company meetings this year as institutions flex their muscles amid anger at boardroom behaviour in the wake of the pandemic.

LSEG decided to hike Mr Schwimmer's pay by more than £200,000 following its $27bn takeover of the data provider Refinitiv.

Institutional shareholders are generally wary of executive pay increases triggered by transformational deals before they have produced evidence of the promised cost savings and strategic benefits.

Shares in LSEG suffered their biggest daily fall in 20 years last month when the company said it would cost more than expected to integrate Refinitiv.

Nevertheless, investors have largely welcomed the combination of LSEG and Refinitiv, propelling the shares to record highs and giving the company a market capitalisation of almost £39bn.

Mr Schwimmer was paid a total of £6.9m last year, up from £2.5m in 2019.

The vote at this month's annual meeting is advisory, rather than binding.

A spokesperson for the company said on Friday: "LSEG's acquisition of Refinitiv has transformed the business into a significantly larger, more complex and truly global company.

"After careful consideration and extensive consultation with major shareholders, the remuneration committee has proposed an increase to David Schwimmer's base salary to reflect the increased responsibilities and scope of the role.

"Taking into account the feedback received from shareholders, the committee also determined to increase the minimum shareholding requirement for the CEO.

"LSEG has delivered strong financial results, demonstrating robust operational resilience and we look forward to engaging with shareholders at our forthcoming AGM."

Glass Lewis, another proxy advisor, has recommended voting in favour of the resolution on pay.