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The London Stock Exchange Group is canvassing shareholders to approve a pay package for its chief executive that is benchmarked against major US data groups such as S&P Global, rather than UK businesses.
LSEG is using US financial data companies such as index provider S&P Global and research and ratings company Moody’s as a measure against which to raise the pay package of chief executive David Schwimmer, according to people with knowledge of the plan.
The group was consulting on raising his pay to about £11mn from £6.25mn, they added; an increase of 76 per cent.
The proposed pay increase for Schwimmer comes nine months after Julia Hoggett, who heads the London Stock Exchange, called for UK executives to be paid better in an effort to retain talent in the country — despite several shareholder revolts against bosses’ pay at some of the UK’s biggest companies.
Meanwhile, the group that owns the LSE is concentrating on transforming into a financial data company and selling access to its vast swaths of data to customers such as banks and asset managers. Under 4 per cent of the group’s revenues come from listing and trading stocks.
LSEG bought data company Refinitiv in 2019 for $27bn in its biggest deal. Since then, the group has shifted its emphasis away from being a stock exchange operator and towards selling subscriptions for its market information on stocks, bonds and other assets.
“That transition is significant and [LSEG] should be considered on a more global basis,” said an investor. “They’ve considered that broader positioning of the business and how it’s a more global business now” when deciding Schwimmer’s new pay package, the investor added.
If approved, Schwimmer’s £11mn package would make him one of the highest paid chief executives of a UK-listed company. Only the head of drugmaker AstraZeneca, who took home £16.9mn last year, and the head of cyber security company Darktrace, who earned £12mn in 2022, are paid more, according to the High Pay Centre think-tank.
Schwimmer has led LSEG since 2018 after a 20-year stint at Goldman Sachs. He took home £4.7mn in 2022, down from £6.8mn in 2021, according to the company’s annual reports.
Pure-play US financial information companies — such as S&P Global, Moody’s, data provider MSCI and analytics company FactSet — all trade on Wall Street at higher valuations than LSEG. Schwimmer told the Financial Times last year that those competitors have a higher multiple “because of that higher percentage of recurring revenue and the perception of higher growth potential”.
By comparison, the head of S&P Global’s pay package was $18.6mn last year, while the chief executive of MSCI took home $13mn in 2022, according to proxy statements.
LSEG said: “The remuneration committee will present a new policy to shareholders in 2024. The committee periodically reviews executive remuneration arrangements, in line with usual corporate governance practices, to ensure they remain fit for purpose and aligned to our ambitious growth strategy.
“The policy will focus on attracting, securing, retaining and rewarding the best talent in a competitive global market,” LSEG added.
Tech giant Microsoft bought a 4 per cent stake in LSEG in 2022 and together they are creating new financial data products. The linchpin of this is Workspace, a new desktop system to rival Bloomberg’s Terminals, which will enable traders to chat to each other and use LSEG’s data alongside Microsoft’s Teams and Excel systems, all in one place.
“If you put £11mn into context of the potential earnings, cash flow and profits, it doesn’t seem excessive, although it’s a huge number,” the investor said, adding: “That’s the balance that boards have to come to these days.”
