pounds 500,000 for sacked Exchange chief

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The Independent Online
Michael Lawrence, fired as chief executive of the London Stock Exchange in early January, agreed a payoff of just under pounds 500,000 yesterday, as an official inquiry into the Exchange looked set to turn into a public slanging match.

The pay-off was well below initial expectations, given the manner of his removal, sources said. Mr Lawrence had opened negotations for over pounds 1m in compensation for his dramatic removal from the pounds 342,000 a year post.

Refusing to comment yesterday on the details, Mr Lawrence said: "I do not see this as a pay-off for failure, but one for success."

Because of the abruptness of Mr Lawrence's dismissal, and the confirmation that it would result in no change of policy, the Exchange is believed to have feared it had a weak hand in the pay-off negotiations, and was expecting a settlement nearer pounds 700,000.

The Treasury select committee said yesterday it intends to recall John Kemp-Welch, chairman of the Stock Exchange, to answer questions about the widely different versions of events leading up to Mr Lawrence's dismissal.

Interviewed by MPs on Wednesday, Mr Lawrence had accused Mr Kemp-Welch of stabbing him in the back, after giving in to pressure from a cabal of powerful market making firms which had mounted a coup to wrest back control over the Exchange.

Mr Lawrence said he believed he had the full confidence of the Exchange's board, and that there was no warning of his sudden demise, engineered by a tiny fraction of the board's members.

Angered by these claims, it is believed that Mr Kemp-Welch will feel obliged to give more explicit details of the problems and difficulties associated with Mr Lawrence's management style.

In his first, highly fraught hearing before the Treasury select committee, Mr Kemp-Welch had told MPs that Mr Lawrence's departure had been preceded by a steady erosion of confidence in the chief executive's ability and his management style.

Sir Thomas Arnold, the Conservative chairman of the Treasury committee, said yesterday: "Michael Lawrence said some very strong things, and we feel Mr Kemp-Welch should be given the opportunity to respond." Referring to the different versions of events, Sir Thomas said: "So what is it all about? We need to know."

In their inquiry MPs have been focussing on the powers of the market- making firms, which dominate the current share trading system in London as middlemen by offering buy and sell prices. MPs' have questioned whether the privileges accorded these market makers are anti-competitive, and therefore whether the way the stock exchang is run, if the allegations of market making dominance are correct, is itself anti-competitive.

The committee said it intends to call the Treasury to give public evidence on the matter, and will ask the Office of Fair Trading whether - in the light of the controversy - it wants to look again at the activities of the market makers.

The OFT may also be asked to give public evidence. "The key question taking shape in my mind is whether issues of the way the exchange manages itself also raise questions of competition," said Sir Thomas.

"One lot of players say the decision making at the Exchange is flawed, and define those flaws, and another lot also says it is flawed, and defines the flaws completely differently. There is a lot to look at here."