What do you do if your company needs to transition from burning fossil fuels to a zero-carbon world? In the case of Rolls-Royce the answer seems to be: call an oil 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 to aerospace and defense analysts after spending 20 years at BP, including five as head of the group’s downstream business, running its refineries, chemical plants and petrol station network.
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 that Erginbilgic can revive its financial performance. That will be crucial for the company as it tries to recover from pandemic travel restrictions that 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 a major role in producing zero emissions electricity and hydrogen.
Erginbilgic was born and educated in Turkey, studying 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 at the American oil company Mobil (now part of ExxonMobil), before joining BP in Turkey in 1997. A fan of tennis and soccer, he moved to the Kingdom United and obtained British citizenship in 2009.
Rolls-Royce is understood to have liaised with senior Cabinet Office officials ahead of the appointment and is seeking clearances from the Ministry of Defence. The government has a “golden share” in Rolls-Royce which would allow it to effectively veto any appointment because of the company’s role in building submarine nuclear reactors. According to these rules, at least one of Rolls-Royce’s presidents or CEOs must be British, and in this case, the president is Glasgow’s Anita Frew.
Erginbilgic had been seen as a potential candidate to lead BP after being promoted, but he left in 2020 to join Global Infrastructure Partners (GIP), a US private equity investor, shortly after the top Bernard Looney was promoted to the top job.
Rolls-Royce Erginbilgic will be paid a base salary of £1.25m, 30% of which will be paid in deferred shares over two years. He will also receive two tranches of £3.75m in shares as a “golden hello” to offset the loss of earnings and GIP bonuses, which will be awarded in 2027 and 2028 and can be clawed back if necessary.
Frew, who led the search for East’s successor, emphasized Erginbilgic’s “significant value creation” during his time at the helm of a “complex, multi-national” business. BP’s downstream (everything that gets oil out of the ground) is on a similar scale to most FTSE 100 companies, including Rolls-Royce. It has 40,000 employees compared to Rolls-Royce’s 44,000.
People who have worked with Erginbilgic credit him with rapidly improving the BP division’s performance by focusing the business on well-defined goals, including the sale of some refineries. Erginbilgic was not a “public and driving figure” in his previous roles, but is known for his mastery of financial details, according to two people who have worked with him.
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Rolls-Royce has emphasized Erginbilgic’s experience of working on the energy transition with its businesses, as well as his time on the board of British aerospace company GKN before it was taken over by listed private equity firm Melrose. At BP he oversaw the acquisition of electric car charging company Chargemaster and also boosted the profitability of petrol stations through initiatives such as the M&S tie-up.
Chloe Lemarie, an analyst at investment bank Jefferies, said it was “a very strong appointment” because of its “mix of expertise in restoring profitability, industrial sectors and energy transition”.
He is not the first head of BP’s downstream business to step up to lead a FTSE 100 company. Erginbilgic worked under Iain Conn at the division before the latter became head of British Gas owner Centrica, also joining -se on the board of Rolls-Royce. Erginbilgic was also the boss of current Rolls-Royce board member Angela Strank. BP was a fuel supplier to airlines using Rolls-Royce engines, a useful relationship given Rolls-Royce’s reliance on “sustainable” aviation fuel to meet medium-term net-zero targets.