What do you do if your company needs to shift from burning fossil fuels to a zero-carbon world? In the case of Rolls-Royce the answer seems to be: call an oil man.
The FTSE 100 jet engines maker on Tuesday announced it had appointed Tufan Erginbilgic as its chief executive, replacing Warren East when he retires at the end of the year. Erginbilgic was not a familiar name to aerospace and defence analysts after spending 20 years at BP, including five as head of the group’s downstream business, running its refineries, chemicals plants and network of petrol 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 is hoping Erginbilgic can revive its financial returns. That will be crucial for the company as it tries to recover from pandemic travel restrictions that grounded the global fleet and led to worries 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 big role in producing zero-emissions electricity and hydrogen.
Erginbilgic was born and educated in Turkey, studying engineering at Istanbul Technical University and a masters in business administration at Bosphorus University, also in Istanbul. He started his career in 1990 at US oil company Mobil (now part of ExxonMobil), before joining BP in Turkey in 1997. A tennis and football fan, he moved to the UK and gained British citizenship in 2009.
Rolls-Royce is understood to have engaged with senior civil servants in the Cabinet Office before the appointment and is seeking clearances from the Ministry of Defence. The government holds a “golden share” in Rolls-Royce that would allow it effectively to veto any appointment because of the company’s role building nuclear submarine reactors. Under those rules, at least one of Rolls-Royce’s chair or chief executive has to be a Briton – and in this case the chair is the Glaswegian Anita Frew.
Erginbilgic had been seen as a potential contender to lead BP after rising through the ranks, but left in 2020 to join Global Infrastructure Partners (GIP), a US private equity investor, shortly after upstream boss Bernard Looney was promoted to the top job.
At Rolls-Royce Erginbilgic will be paid a base salary of £1.25m, 30% of which will be paid as shares deferred for two years. He will also receive two tranches of £3.75m in shares as a “golden hello” to compensate for lost earnings and bonuses from GIP, which will vest in 2027 and 2028 and can be clawed back if needed.
Frew, who ran the hunt for East’s successor, emphasised Erginbilgic’s “creation of significant value” during his time in charge of a “complex, multinational” business. BP’s downstream (everything bar actually getting the oil out of the ground) is on a similar scale to most FTSE 100 companies – including Rolls-Royce. It has 40,000 employees compared with Rolls-Royce’s 44,000.
People who have worked with Erginbilgic credit him with rapidly improving the performance of the BP division by focusing the business on tightly defined targets, including by selling off some refineries. Erginbilgic was not a “push-forward, public figure” in his previous roles but is known for his command of financial details, according to two people who have worked with him.
Rolls-Royce has emphasised Erginbilgic’s experience of working on the energy transition with his 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 the electric car charging company Chargemaster, and also upped the profitability of petrol stations through initiatives such as the M&S tie-up.
Chloe Lemarie, an analyst at the investment bank Jefferies, said he was “a very solid appointment” because of his “blend of experience on profitability restoration, 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 boss of British Gas owner Centrica – also joining the Rolls-Royce board. Erginbilgic was also a boss of current Rolls-Royce board member Angela Strank. BP was a supplier of fuel to the airlines who use Rolls-Royce engines – a useful relationship given Rolls-Royce’s dependence on “sustainable” aviation fuel to meet medium-term net zero targets.
• This article was amended on 27 July 2022 to remove an incorrect reference to Istanbul being the capital of Turkey.