The Stock Exchange stunned the City yesterday by sacking its chief executive, Michael Lawrence. He had lost the confidence of member firms and the board of directors, said the Exchange in an unusually powerful condemnation of its senior executive.
Mr Lawrence was informed of the board's decision at a meeting he attended briefly yesterday morning which appeared to have split the Stock Exchange's senior executives. John Kemp-Welch, the former senior partner at Cazenove and now chairman of the Exchange, said the decision had been clear cut but it was not unanimous and not all of the board was present at the meeting.
Mr Kemp-Welch said: "The board, having lost confidence in its chief executive, has required his resignation with immediate effect. While Mr Lawrence's departure reflects the loss of confidence in him, it does not imply any change in the Stock Exchage's policy."
He added that Mr Lawrence's sacking had not been prompted by any single event. "This erosion of confidence took place gradually. A combination of incidents made his situation untenable."
Refusing to elaborate on the precise reasons for the sacking, Mr Kemp- Welch hinted at Mr Lawrence's perceived failings by saying that the search for a successor would be trying to find "an able businessman, someone able to formulate and drive through strategy and able to forge a relationship of confidence with the Exchange's members."
While the search for a successor continues, Mr Kemp-Welch will chair the Exchange's executive committee, supported by two deputy chairmen. Ian Plenderleith, a director of the Bank of England and a member of the Stock Exchange board, was yesterday promoted to that position, joining Ian Salter. Mr Kemp-Welch would not be drawn on whether Mr Lawrence had received any formal warnings. But he stressed that nothing improper or unethical had taken place. "There is no question of dishonesty at all."
Labour City spokesman Alistair Darling demanded a full explanation "to prevent lasting damage to the reputation of the City. The fact that Michael Lawrence has gone signals deeper problems at the Stock Exchange than they are admitting. It is fairly well-known that he wanted to pursue radical changes within the Stock Exchange and that he was being resisted.
"He had only been at the Stock Exchange for a comparatively short period and his sudden departure clearly indicates something is going wrong."
The resignation of Mr Lawrence is a further embarrassment for the Exchange, coming just two years after his predecessor, Peter Rawlins, was also forced to quit following the expensive fiasco of Taurus, the computer system that failed to work. Mr Lawrence's appointment followed an exhaustive eight-month search.
It follows a turbulent year at the Exchange during which Mr Lawrence is widely seen to have antagonised a range of vested interests. His determination to press ahead with an order-driven alternative to London's existing quote driven share dealing system has put backs up at the City's powerful market making firms.
He has also upset company directors with his insistence on tightening up the terms of the Greenbury report on corporate governance. And he was roundly criticised for a leaked letter to the Treasury, effectively accusing the government of insider dealing during the sale of its remaining stakes in National Power and Powergen.
Investors saw the value of their electricity shares collapse the day after the sell-off of the generators' shares when the industry's official watchdog announced he was reviewing power prices. The City was aghast at his decision to publish a private letter to the Treasury, suspecting he was simply trying to endear himself to the Labour Party.
In the highly clubbable atmosphere of the City, his action was seen as a betrayal, an unnecessary washing of dirty linen in public. The feeling that Mr Lawrence was not "one of us" was confirmed by his threat last year to sue an exchange member, Sharelink, over its plans to provide an Internet share dealing system. He later caused the Exchange further embarrassment by climbing down.
Mr Kemp-Welch refused to be drawn on exactly what the board meant by the alleged loss of confidence, nor when the doubts emerged.
Mr Lawrence received a controversial bonus of pounds 100,000 a year ago as a reflection of his achievements during his first year in office. He enjoys a one-year rolling contract of employment with the Exchange and in the year to March took home pounds 422,000 including the bonus payment and an pounds 80,000 contribution to his pension. Mr Lawrence, 52, celebrated his appointment to the top job by buying actor Rowan Atkinson's red Aston Martin.
Comment, page 17
Board of the London Stock Exchange
John Kemp-Welsh Chairman
Gary J Allen md and chief executive, IMI
Graham Allen md, ICI Investment Management
Richard A Barfield chief inv manager, Standard Life Ass John Bond group chief executive, HSBC Hdgs
Donald H Brydon deputy chief executive, BZW
Stephen Cooke chief executive, Gerrard Vivian Gray
Masashi Kaneko chairman, European div, Nikko Europe
Micheal Marks dep chairman, Merril Lynch Intn'l
Robert Metzler md, Morgan Stanley Secs
Ian Plenderleith executive director, Bank of England
Mark Radcliffe chairman, Upton Mangmnt Services
Ian Salter* director, SGST (Investment Advisers) Nigel Sherlock chairman, Wise Speke
Bernard Solomons chairman, Allied Provincial Securities
Nicholas Verey chairman, SG Warburg Securities
*deputy chairman As at 16.10.95Reuse content