The past 18 months have been full of surprises at Rolls-Royce, the engine-making titan of UK manufacturing. The Serious Fraud Office launched an investigation (still unresolved) into allegations of bribery; there was an aborted offer for Finnish marine group Wärtsilä; and there were up to four profits warnings, depending on how one read the frequently-updated official guidance. Now here’s another surprise: chief executive John Rishton is retiring at the age of 57 after only four years in the post.
It would be easy to conclude that Rishton was encouraged towards the exit by the other events. On this occasion, the interpretation feels wrong. The share price has been recovering in recent months (and is up 63% overall on Rishton’s watch, as Rolls was at pains to point out). The other clue is the lack of a severance payment for loss of office. So we should take him at his word that he fancies “a change of lifestyle” after 14 years as an executive in big boardrooms (the others were Dutch supermarket group Ahold and British Airways, as finance director).
By contrast, Warren East, 53, the successor, is hungry for frontline action. East is so associated with Arm Holdings, the microchip-designer which he led for 13 years until 2013, that his appointment counts as yet another surprise.
It’s a intriguing appointment. Arm is arguably the UK’s biggest corporate success in technology for a generation. Given the rewards that come with building a £17bn company, East doesn’t need the Rolls gig for the money. And, after a year on its board as a non-executive, he knows what he’s signing up to.
Small chips for mobile phones would seem to have little in common with large engines for aeroplanes and ships. But putting an engineer in charge of an engineering company sounds like common sense. The 4% jump in Rolls’ share price says as much.
