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 The British company's surprise announcement on Wednesday said that
John Rishton would retire in July after four years at the helm and
will be succeeded by the former head of ARM Holdings, Britain's
biggest listed technology company.
East, who has been a non-executive director of Rolls-Royce since
January last year, was chief executive of ARM between 2001 and 2013,
overseeing its expansion as a leading developer of microchips for
the likes of Apple <AAPL.O> and Samsung <005930.KS>.
Shares in Rolls-Royce rose to an eight-month high in early trading,
with JP Morgan <JPM.N> upgrading the stock to "hold" from
"underweight".
Analysts at the bank said that East, 53, would bring renewed vigor
to the development of civil aviation engines and to the challenges
posed by shrinking western defense budgets and a lower oil price
that has squeezed customers in the oil gas and marine sectors.
East, who plays the organ at his local church and favors sober suits
rather than the polo-shirted look adopted by many U.S. technology
executives, said that the opportunity was one he could not refuse.
Rolls-Royce Chairman Ian Davis, meanwhile, spoke of East's "stellar
record" at ARM since taking over after the dot-com bubble burst in
2001. A pound invested in the company's stock a couple of years
later would have been worth 18 pounds ($27) by the time he left.
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 <BA.N> and Airbus, Edison
Research analyst Roger Johnston said.
TOP GAINER
Rolls-Royce shares, which have fallen 19 percent since the start of
2014, were the top gainer on the blue-chip FTSE 100 index <.FTSE> at
1204 GMT, up 3 percent at 10.36 pounds.
Rishton, 57, steps down after a difficult period for the
131-year-old company. A decade of strong profit and revenue growth
came to an end last year, followed by a warning in February that
profit would fall by as much as 13 percent this year.
Chairman Davis acknowledged there had been shareholder disquiet
around the time of the profit warnings, but Rishton's decision to
stand down was entirely his own.
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Rishton said that after 14 years of being a CEO and CFO he was
"leaving for a change of lifestyle".
East will also take over in the midst of a restructuring program,
with 2,600 jobs being cut from a global total of about 55,000, as
the group attempts to compete with bigger and more profitable U.S.
rival General Electric <GE.N>.
He will be helped, however, by last week's momentum-boosting order
to supply engines for 50 Airbus A380 planes for Emirates airline [EMIRA.UL].
The $9.2 billion deal is the biggest in the British company's
history.
East declined to give details about his strategy before he starts in
the role, but he said that "the transformations absolutely need to
continue and be driven through to conclusion".
He will receive a base salary of 925,000 pounds ($1.4 million) 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.
($1 = 0.6650 pounds)
(Editing by David Goodman)
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