FRANKFURT (Reuters) - Support for Deutsche Boerse DB1Gn.DE CEO Carsten Kengeter on the exchange group's supervisory board is weakening as investigations into insider trading allegations drag on, according to a person with knowledge of the matter.

Carsten Kengeter, CEO of Deutsche Boerse attends the initial public offering of Scale at the Frankfurt stock exchange in Frankfurt, Germany March 1, 2017. REUTERS/Ralph Orlowski

Last week, Kengeter won a reprieve when the board of the German company agreed to pay a hefty fine for its role in a disputed share purchase by Kengeter to try to end investigations by the Frankfurt prosecutor.

But one member of the 12-strong board voted against the 10.5 million euro ($12.6 million) settlement, the source said. Others only backed it “with clenched fists in their pockets” and with serious reservations about Kengeter, the source added, speaking on condition of anonymity because board discussions are private.

On Thursday, the board meets again, this time to deliberate ways to cap Kengeter’s pay, according to two people familiar with the matter - in another sign of the pressure on the CEO.

A spokesman for Deutsche Boerse declined to comment on last week’s vote or on Thursday’s agenda. He added pressure on Kengeter to step down was “pure speculation”.

Kengeter has also been asked by prosecutors to pay 500,000 euros to close a personal case against him, a Frankfurt court confirmed on Wednesday. The court said it would take several weeks to rule on it.

Kengeter has been under investigation since February, when prosecutors raided his office and apartment looking into his purchase in December 2015 of 4.5 million euros of Deutsche Boerse shares as part of an executive compensation program.

The purchase was made two months before Deutsche Boerse said it was in merger talks with the London Stock Exchange LSE.L, prompting a sharp rise in the value of the German firm's shares.

The talks later collapsed, but prosecutors wanted to know whether Kengeter was aware of the potential deal when he made his share purchase, which might constitute insider trading.

Kengeter has always denied wrongdoing. “Insider trading goes against everything I stand for,” he told shareholders in May.

But criticism of the 50 year old, which was already on the rise following the failure of the LSE deal, has picked up as the investigations have dragged on, according to interviews with regulators, investors and Deutsche Boerse employees.

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“We can’t recall that there has ever been such severe damage to reputation in the long history of our company,” the group’s works council said in an internal newsletter seen by Reuters.

Some shareholders, already irate at the millions of euros in advisory fees for the failed merger, were furious last week when the cost of the settlement deal was announced.

“The damage to Deutsche Boerse’s reputation is already immense. Shareholders should not be asked to shoulder more costs now. This approach is not acceptable,” said Union Investment fund manager Ingo Speich.

Such criticism is now starting to erode support for Kengeter at the top of the company, the person with knowledge of the matter said, adding Chairman Joachim Faber was also under fire.

“Only a comprehensive fresh start on the personnel front can begin to repair the damage,” said the person.

The Deutsche Boerse spokesman said pressure on Faber was “pure speculation”.

Kengeter’s contract expires at the end of March, and the board has balked at extending it until his name is in the clear.

That could take months.

A spokeswoman for the Frankfurt prosecutor, which has to approve the settlement with Deutsche Boerse, said on Wednesday the case was in the hands of a judge and wouldn’t comment further.

Once the judge has ruled on the settlement, German markets watchdog BaFin and the regulator in the state of Hesse that oversees Deutsche Boerse will start their own probes, spokespeople for both regulators have said.

“The members of the management board of Deutsche Boerse need to be professionally competent and personally reliable, as stated by law,” said a spokesman for the Hesse economics ministry.