2nd Mar 2016 10:25
LONDON (Alliance News) - Rolls-Royce Holdings PLC granted activist investor ValueAct Capital a seat on its board on Wednesday as the engine maker pushes forward with is massive restructuring.
San Francisco-based ValueAct has built up a stake of around 11% in Rolls-Royce, starting in the middle of 2015, following the slew of profit warnings the company has issued.
It has been pushing for a seat on the board to better influence future strategy and won that battle on Wednesday when Bradley Singer, a ValueAct partner and chief operating officer, was appointed as a non-executive director.
He will take on the role with immediate effect and will be a member of Rolls-Royce's Science & Technology Committee.
"Bradley Singer has an outstanding record as a business leader. He brings with him experience of public companies during periods of change, growth and significant financial outperformance, particularly in the US where Rolls-Royce has important business interests and a significant shareholder base," said Rolls-Royce Chairman Ian Davis.
"It is a privilege to be joining the board and I look forward to working closely with the board members and management team as they execute their plans for sustained long-term success," Singer added.
Rolls-Royce has been hit by squeezed defence budgets, a downturn in orders from the oil and gas industry and by the transition of major aerospace programmes which will damp its orders.
Chief Executive Warren East, brought into Rolls-Royce in mid-2015 to oversee its restructuring and return to health, has set out massive reorganisation plans for the group cutting jobs and executives while retooling the divisional structure.
From January, Rolls-Royce ended its previous divisional structure, split between Aerospace and Land & Sea units. Instead, it will have five market-facing units, covering Civil Aerospace, Defence Aerospace, Marine, Nuclear and Power Systems. The presidents of those five units will then report directly to Warren East, Rolls-Royce's chief executive.
Due to those changes, Tony Wood and Lawrie Haynes, respectively the presidents of the Aerospace and Land & Sea divisions, will retire, though they will remain with the group through a portion of 2016 to oversee the transition.
In November, East set out a series of other proposals designed to simplify the company's structure and slash its fixed cost base. Rolls-Royce said the changes will help margins and cash flow, cut fixed costs and add more pace and accountability to decision-making within the business.
In total, Rolls-Royce said the changes it will make will deliver incremental gross cost savings of GBP150.0 million to GBP200.0 million per year, feeding through from 2017.
Rolls-Royce shares were down 0.4% to 680.50 pence.
By Sam Unsted; [email protected]; @SamUAtAlliance
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