IET Vice President Warren East has been named the new CEO of engineering giant Rolls-Royce, replacing current chief John Rishton after a year of falling profits.
East, an Oxford University engineering graduate and an expert in semiconductor technology, has served as Rolls-Royce’s non-executive director since January last year. Previously, he was the CEO of British semiconductor and software design firm ARM, between 2001 and 2013. Under his leadershop, ARM grew into Britain's biggest listed technology company.
“I am delighted to be appointed as Chief Executive of Rolls-Royce,” East said. “It is well positioned in growth markets, with world-class engineering skills and a proud record of innovation and delivery. I have a strong desire to return to an executive position with the energy and enthusiasm a role like this demands.”
East will take on the responsibility at Rolls-Royce in July after the retirement of his predecessor Rishton. East will face the difficult task of steering the company through an uneasy period, which has seen the jet-engine maker’s profits fall due to the shrinking defence budgets of western countries. Rolls-Royce’s business has also suffered from oil price crises, which have affected many of its customers in the gas and marine sector. In November last year, the firm announced it would have to cut 2,600 jobs in its aerospace division.
“Warren has an outstanding record as CEO of ARM Holdings,” said Rolls-Royce’s chairman Ian Davis. “He is an engineer by training; he has a deep understanding of technology and of developing long-term partnerships. He has proven strategic and leadership skills in a global business and a strong record of value creation.”
East's engineering background with ARM is also seen as a key attribute, as Rolls-Royce looks to develop quieter and more efficient engines for aircraft made by Boeing and Airbus, Edison Research analyst Roger Johnston said.
57-year-old Rishton is stepping down after 14 years as Rolls-Royce’s CEO. He led the firm through a decade of economic growth, which ended last year with the announcement that the firm’s profits could fall by up to 13 per cent.
Although Davis admitted there were concerns among shareholders about the situation, Rishton’s decision to retire was said to be completely voluntary.
“After 14 years as a CEO and CFO I have decided it is time for a change in lifestyle,” Rishton said. “We have made good progress transforming Rolls-Royce and have a strong team in place. While there is clearly more to do, the company is better placed to face the future. I am sure Warren will lead the business successfully through the next phase and I wish him and everyone at Rolls-Royce well.”
East will receive a base salary of £925,000 a year, plus a pension and performance-related bonus, the company said, adding that the benefits are in line with or below those offered to Rishton.
East will continue with the restructuring programme started by his predecessor, which was designed to make the firm more competitive, enabling it to better face its rivals such as US General Electric.
Last week Rolls-Royce confirmed a $9.2bn deal to supply engines for 50 Airbus A380 planes for Emirates airlines – a major boost amidst the economic decline.
The company’s shares, which have fallen by 19 per cent since the start of 2014, were the top gainer on the blue-chip FTSE 100 index at 12.04 GMT, up 3 per cent at £10.36.
An organ player at his local church, East has been associated with the IET for nearly 30 years and a Fellow for the last nine years.