Expert Corporate Governance Service (ECGS)
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Etude de l'AG du 26/04/2017

Item 3: Approve the Remuneration Report. Total variable remuneration exceeds 300% of base salary, the structure is considered unsatisfactory and the quantum is high.

Items 4 - 15: Elect the Board of Directors. There is insufficient independent representation on the Board and on the Audit Committee. The level of independence on the Board is very low (27.3%) compared with the average of 58.5% for the FTSE 100.

On February 28, 2017, LSE refused to divest its Italian bond trading platform, MTS, severely jeopardizing the chances of regulatory blessing for its controversial €29 billion merger with continental rival Deustche Börse. The European Commission had stressed earlier that divesting MTS was essential for protecting French rival Euronext from anticompetitive behaviour. The unexpected success of the Brexit campaign in June 2016 (after the merger announcement but before the EGM), put the future of the merger in doubt as German politicians expressed dismay at placing the new headquarters in London.

At the 2016 EGM convened to approve the merger, we urged LSE shareholders to oppose it citing a low take-out premium (2% higher than the last three months prior to announcement), high regulatory risk and the fact that the Board did not definitively demonstrate that it had explored all strategic options with other potential suitors (notably ICE).

London Stock Exchange Group

London Stock Exchange Group is a global markets infrastructure business based in the United Kingdom. Co's operating segments include: Information Services, which provides a range of information and data products including indexes and benchmarks; Post Trade Services LCH, which provides clearing services through which counterparty risk is mitigated across multiple asset classes; Capital Markets, provides access to capital for domestic and international businesses and electronic platforms for secondary market trading of equities, bonds and derivatives; and Group Technology, which provides secure technologies to customers that require performance at high levels of availability and throughput.


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