Embattled Rolls-Royce Holdings kicks off search for next chairman
The embattled engineering giant Rolls-Royce Holdings is kicking off a search for its next chairman, potentially paving the way for the company’s first foreign figurehead since it was privatised by the government more than 30 years ago.
Sky News has learnt that Rolls-Royce’s board has begun the process of identifying a successor to Sir Ian Davis, the McKinsey veteran who took over as the British industrial group’s chairman in May 2013.
The search is understood to be at a very early stage, and an appointment is unlikely to be announced until well into next year.
Nevertheless, it comes during a period of chronic uncertainty for the best-known name in British manufacturing, with thousands of jobs being shed and bleak forecasts about the pace of its recovery from the coronavirus pandemic.
In a statement issued to Sky News this weekend, a Rolls-Royce spokesman said: “The chairman will have served nine years in March 2022 and it is best practice that he will stand down by then.
“The board will ensure an orderly transition.”
Following a 16-year spell in state ownership, Rolls-Royce returned to the private sector in 1987 with a stipulation that its chairman and chief executive must be British citizens.
That rule has since been relaxed to apply to either one of the top two jobs, meaning that an overseas national could become Rolls-Royce’s chairman for the first time.
Warren East, a Brit, has been the company’s chief executive since 2015, and is not expected to step down before Sir Ian’s successor as chairman is in place.
There was no formal suggestion this weekend that Rolls-Royce would opt to appoint a foreign, rather than British, chairman.
The company has also been forced into a search for a new finance chief following Stephen Daintith’s resignation to join Ocado, the online grocer.
On Friday, Mr East warned that the pace and timing of Rolls-Royce’s recovery from the pandemic were uncertain, despite substantial progress being made in relation to COVID-19 vaccines in recent weeks.
Rolls-Royce’s shares have halved during the last 12 months, although they have staged a partial recovery as optimism has grown about the resumption of international air travel.
In September, it raised £5bn through a combination of debt and equity, including government guarantees.
Sir Ian is understood to have hinted to a number of leading shareholders who he spoke to after the capital-raising that he was unlikely to remain at the helm for much longer.
The entire aviation industry supply chain has been plunged into crisis by the pandemic, with Rolls-Royce confirming earlier this year that it would cut 9000 jobs.
Rolls-Royce is a rarity in corporate Britain because of the state’s golden share, which gives Whitehall a veto over certain strategic decisions.
It had planned to sell hundreds of millions of pounds of new shares to sovereign wealth funds from Kuwait and Singapore as part of its equity-raising, but was forced to abandon the proposals amid objections from City investors.
The company has drawn up plans to generate around £2bn from disposals, including the sale – announced this week – of its nuclear instrumentation business.
On Friday, shares in Rolls-Royce closed at just 117p, giving the company a market capitalisation of £9.79bn.
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