Can the new boss of Rolls-Royce revive his fortune? | Rolls Royce

What do you do if your business needs to transition from burning fossil fuels to a carbon-free world? In the case of Rolls-Royce, the answer seems to be: call a tanker.

The FTSE 100 jet engine maker announced on Tuesday that it had appointed Tufan Erginbilgic as chief executive, replacing Warren East when he retires at the end of the year. Erginbilgic was not a household name for aerospace and defense analysts after spending 20 years at BP, including five as head of the group’s downstream business, managing its refineries, chemical plants and network. service stations.

He was responsible for BP’s successful petrol station tie-up with Marks & Spencer, bringing sandwiches, ready meals and Percy Pigs to the motorway masses.

Rolls-Royce hopes Erginbilgic can boost its financial returns. This will be crucial for the company as it attempts to recover from the pandemic travel restrictions that have grounded the global fleet and raised concerns about its viability. At the same time, it must invest heavily in technologies ranging from unproven net-zero jet engines to small modular nuclear reactors, which Rolls-Royce and the UK government hope will play an important role in generating electricity and zero-emission hydrogen fuel.

Erginbilgic was born and educated in Turkey, studied engineering at Istanbul Technical University and a master’s degree in business administration at Bosphorus University, also in the Turkish capital. He began his career in 1990 with the American oil company Mobil (now part of ExxonMobil), before joining BP in Turkey in 1997. Passionate about tennis and football, he moved to the United Kingdom and obtained British citizenship in 2009.

Rolls-Royce is understood to have spoken to senior Cabinet Office officials prior to the appointment and is seeking clearances from the Ministry of Defence. The government holds a “golden share” in Rolls-Royce that would effectively allow it to veto any appointment because of the company’s role in building nuclear submarine reactors. Under these rules, at least one of Rolls-Royce’s chairman or chief executive must be a Briton – and in this case the chairman is Glaswegian Anita Frew.

Erginbilgic had been considered a potential candidate to head BP after rising through the ranks, but he left in 2020 to join Global Infrastructure Partners (GIP), a US private equity investor, shortly after the boss in upstream Bernard Looney was promoted to the most senior position.

At Rolls-Royce, Erginbilgic will receive a base salary of £1.25 million, 30% of which will be paid in shares deferred for two years. He will also receive two £3.75m tranches of shares as a ‘golden hello’ to make up for lost income and GIP bonuses, which will vest in 2027 and 2028 and can be recovered if needed.

Frew, who ran the hunt for East’s successor, pointed to Erginbilgic’s “significant value creation” during his tenure at the helm of a “complex and multinational” company. BP’s endorsement (anything excluding extracting oil from the ground) is on a similar scale to most FTSE 100 companies, including Rolls-Royce. It has 40,000 employees against 44,000 for Rolls-Royce.

People who have worked with Erginbilgic credit him for rapidly improving the performance of the BP division by focusing the business on well-defined goals, including selling some refineries. Erginbilgic was not a “public figure pushed forward” in his previous roles, but is known for his mastery of financial details, according to two people who have worked with him.

Sign up for the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

Rolls-Royce highlighted Erginbilgic’s experience in energy transition with its businesses, as well as its time on the board of British aerospace company GKN before its takeover by listed private equity firm Melrose. At BP, he oversaw the acquisition of electric car charging company Chargemaster and also increased service station profitability through initiatives such as the combination with M&S.

Chloe Lemarie, an analyst at investment bank Jefferies, said it was “a very strong appointment” because of her “mix of experience on restoring profitability, industry sectors and transitioning energy”.

He is not the first BP downstream executive to take charge of a FTSE 100 company. Erginbilgic worked under Iain Conn in the division before the latter became boss of British Gas owner Centrica – also joining the board of Rolls-Royce. Erginbilgic was also the boss of current Rolls-Royce board member Angela Strank. BP was a fuel supplier for airlines that use Rolls-Royce engines – a useful relationship given Rolls-Royce’s reliance on ‘sustainable’ aviation fuel to meet net-zero targets medium term.