London Stock Exchange Group (LSEG) shareholders are set to vote on Thursday on a contentious proposal that could see CEO David Schwimmer’s potential pay doubled. The move comes as the 300-year-old exchange pushes for higher executive rewards to fortify the UK’s capital markets.
At its annual general meeting, LSEG will present proposals to allow Schwimmer’s total yearly remuneration to increase substantially, potentially reaching £13.063 million ($16.14 million) from the current £6.25 million.
In recent years, executive compensation at top UK companies has faced mounting criticism from shareholders, particularly concerning the widening gap between CEO pay and average worker earnings. Despite this, some UK fund managers are advocating for more flexibility in board decisions regarding top talent compensation, aiming to prevent a talent exodus to jurisdictions where pay is less contentious.
Schwimmer’s proposed package largely remains performance-based, with his annual basic pay set to rise from £1 million to £1.375 million starting January 2024. In 2023, the former Goldman Sachs banker earned £5.127 million, a figure LSEG argues falls behind competitors like CME, Nasdaq, ICE, S&P Global, and MSCI.
LSEG contends that its transformation into a highly successful global organization since its last pay policy review in 2020 justifies the proposed compensation changes. The company highlights its alignment of executive compensation with global sector peers and emphasizes a pay-for-performance philosophy.
However, Institutional Shareholder Services (ISS), a shareholder advisory firm, has recommended rejecting Schwimmer’s remuneration adjustments, citing incomplete integration of Refinitiv, a data and analytics company acquired by LSEG in January 2021.
Amidst Brexit-induced competition from EU financial centers and pressure from established rivals like New York, LSEG faces regulatory scrutiny to enhance London’s competitiveness as a financial hub. Julia Hoggett, CEO of London Stock Exchange plc, chairs the Capital Markets Industry Taskforce, which asserts that executive remuneration policy plays a crucial role in attracting, retaining, and rewarding top talent.
Schwimmer’s proposed pay increase coincides with Britain’s removal of a cap on banker bonuses inherited from the EU and amid concerns over a rising cost of living. The acquisition of Refinitiv, valued at $27 billion, has significantly shifted LSEG’s business focus towards data, enabling it to better compete with market leader Bloomberg.
It’s worth noting that Thomson Reuters, the parent company of Reuters News, holds a minority share in LSEG following the Refinitiv acquisition, with LSEG also paying Reuters for news services.
