Rolls-Royce chief’s £40m payday may be justified – here’s why
Rolls-Royce’s chief executive Tufan Erginbilgic is already in line for a monster payday after just over a year and a half in the role.
The FTSE 100 executive could be set for as much as £40m via a combination of remuneration and the company’s soaring share price.
Erginbilgic’s £13m remuneration packet in 2023 already made him the third highest paid FTSE 100 CEO, second only to Astrazeneca’s Pascal Soriot and Relx boss Erix Engstrom, according to a report from the High Pay Centre.
But even despite ongoing rows in the City over chief executive’s pay, critics would be hard pressed to find fault in the Turkish businessman’s performance.
Since he joined last January, shares have more than quadrupled to top London’s premier index. That rally is made all the more remarkable given the struggles that gripped Rolls-Royce in the years prior, which included a very close brush with bankruptcy during the pandemic. Erginbilgic will now net over £32m in paper profit from the 9.3m shares he was awarded on arrival.
Critics of his pay will point to the favourable market conditions which have led to the engineering giant posting a string of stellar results.
Granted, surging profits in its aircraft engine making division can be placed down to booming demand for travel in the post-Covid era.
Its defence business has also benefitted from rising military spending by government’s around the globe in the wake of conflict in Ukraine and the Middle East.
But Erginbilgic has been credited for his no-nonsense, cost cutting approach, epitomised by a widely-publicised statement to investors that Rolls’ was a “burning platform,” not long after taking up the position.
He has moved at speed to axe middle managers and switch-up the senior management of the company and it is no coincidence the share price rally coincided with his arrival.
Broader argument’s over whether anyone should be entitled to such a huge pay rise given the economic backdrop still stand. Yet the exceptional performance has given a huge vote of confidence in British manufacturing and the capital’s Stock Exchange amid fears that business is flocking elsewhere.
The true test will be how Rolls’ fares when the boom in aviation inevitably comes to an end. As of today though, Erginbilgic’s record is near-faultless.