Market Analysis

To vote on tripling the CEO's possible compensation, LSEG shareholders

Amos Simanungkalit · 24 Apr592 Views

Shareholders of the London Stock Exchange Group (LSEG) are set to vote on Thursday regarding a potential increase in CEO David Schwimmer's compensation. The move comes as the historic exchange seeks to enhance executive pay to bolster the strength of UK capital markets.

At the upcoming annual general meeting, shareholders will consider proposals that could double Schwimmer's total yearly remuneration to a maximum of £13.063 million ($16.14 million) from the current £6.25 million.

In recent years, executive pay at top UK companies has sparked criticism from shareholders, who cite a widening disparity between CEO earnings and those of average workers. Nevertheless, some UK fund managers support granting boards more flexibility in compensating top talent to prevent talent drain to countries where pay is less contentious.

Schwimmer's proposed package largely remains performance-based, with his annual basic pay set to increase 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 such as CME, Nasdaq, ICE, S&P Global, and MSCI.

LSEG, which has undergone significant transformation into a global organization since its pay policy review in 2020, defends the proposed changes, emphasizing alignment with the median of its global sector peers and a commitment to a pay-for-performance approach. However, ISS, a shareholder advisory firm, has recommended rejecting Schwimmer's remuneration adjustments, citing incomplete integration of Refinitiv, a company acquired by LSEG in January 2021.

The competitive landscape has intensified for LSEG post-Brexit, with EU-based financial centers like Paris and Amsterdam vying for listings alongside traditional rivals such as New York. This has spurred calls for regulatory measures to enhance London's competitiveness as a financial hub.

Julia Hoggett, CEO of London Stock Exchange plc, leads the Capital Markets Industry Taskforce, which underscores the role of executive remuneration policy in attracting and retaining top talent, essential for maintaining competitiveness.

Schwimmer's proposed pay increase coincides with the removal of a cap on banker bonuses in the UK and amid concerns over a cost-of-living crisis in the country. The acquisition of Refinitiv in 2021 has significantly reshaped LSEG, with data now constituting approximately 70% of its business, positioning the company to better compete with industry leader Bloomberg.