By Robert Wall And Ian Walker
LONDON-- Rolls-Royce Holdings PLC said Wednesday that John
Rishton will retire as chief executive and be replaced by former
ARM Holdings PLC chief Warren East following a tumultuous period
for the British engine maker, marked by profit warnings, layoffs
and the exit of its chief financial officer only a few months
ago.
Mr. Rishton will depart on July 2 after more than 4 year leading
the company.
Mr. East was CEO of ARM Holdings from 2001 to 2013 and a
non-executive director at Rolls-Royce. Mr. East "has proven
strategic and leadership skills in a global business and a strong
record of value creation," Rolls-Royce chairman Ian Davis said.
The change comes after one of Rolls-Royce's big investors, the
Seqoia Fund, called Rolls-Royce's performance in 2014 "a horror
show." In its annual report, the fund criticized Mr. Rishton for
showing "minimal awareness of the returns on capital his
acquisitions have generated."
Rolls-Royce shares slumped last year after the company said it
wouldn't have any profit growth and then revised earnings downward
multiple times. The company in November announced plans to slash
2,600 jobs and the replacement of chief financial officer Mark
Morris, a 27-year company veteran.
To appease investors, Rolls-Royce last year embarked on a GBP1
billion ($1.5 billion) share repurchase, a first for the
company.
Mr. Rishton's tenure also has seen the U.K. Serious Fraud Office
and U.S. regulators begin a process to look into alleged illegal
business dealings Rolls-Royce conducted in Asia. Rolls-Royce
strengthened its anti-corruption process, though the probe remains
open.
The British company also tried to strengthen its maritime engine
business through a $10 billion takeover of Finland's Wärtsilä Oyj,
which rebuffed Rolls-Royce's preliminary approach. The attempted
acquisition of a company of that size surprised investors who
hadn't realized expansion was on management's agenda so soon after
its full takeover of Tognum, a German engineering company
originally acquired in partnership with Daimler.
The company also sold its subscale industrial gas turbine
business to Siemens.
Rolls-Royce said Mr. East will get a base salary of 925,000
pounds ($1.38 million) and a pension allowance of 25% of salary. He
will also be eligible to participate in annual performance related
bonus scheme up to a maximum of 180% of salary per annum and in the
performance share plan up to a maximum of 180% of salary.
Write to Robert Wall at robert.wall@wsj.com and Ian Walker at
ian.walker@wsj.com
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