Rolls-Royce chief to get £916,000 bonus despite air engine giant's record losses
Rolls-Royce boss Warren East has landed a £916,000 bonus and will receive an £18,000 pay rise this year despite the aircraft engine maker posting its largest ever loss and one of the biggest in UK corporate history.
The group' s chief executive was handed a total pay package of £2.1 million in 2016, including the bonus windfall and a £925,000 salary, according to its annual report.
And Rolls said his annual salary would increase by 2% to £943,000 from September.
It comes despite dire results for 2016, which showed Rolls plunging into the red with pre-tax losses of £4.64 billion after being hit by the pound's plunge and a corruption scandal.
The blue chip giant's record losses came after a £4.4 billion writedown caused by the collapse of the pound since the Brexit vote, as well as a £671 million penalty to settle bribery allegations.
But in its annual report, the group said it had decided to award bonuses for the first time in three years as its underlying profit was above target.
Results last month showed underlying profits nearly halving to £813 million in 2016.
In its latest annual report, chairman Ian Davis insisted the group has " delivered on our commitments in a difficult year".
While picking up annual bonuses, all of the group's top bosses missed out on share bonuses under the three-year long-term incentive scheme that were due to pay out last March after the performance and share price woes.
But Mr East was earmarked 164,202 shares last March under the scheme, which will pay out in 2019 if targets are met.
Mr East was appointed chief executive of Rolls in July 2015 and has been since been leading a widespread overhaul.
The group is on track to make annual savings of around £200 million by the end of the year.
Mr East has been slashing jobs and axing layers of management, confirming that 700 management positions were cut in 2016.
The group said in December that it was axing another 800 jobs worldwide across its embattled marine business.
Last year's huge annual loss follows a tough past two years for Rolls after a string of profit warnings and last month's corruption fine to settle a case brought by the Serious Fraud Office and authorities in the US and Brazil.
In its annual report, Rolls said current management would not see their bonuses affected by the settlement, as it said the "legal judgment was very clear that there was no culpability in relation to existing management".
The report also confirmed increased political risks over the last year, with the group having set up a steering committee to monitor the impact from the Brexit vote.
It added that it was also looking closely at changes under President Donald Trump's administration in the US.
"Some of these changes in policy with regard to trade, tax and defence and infrastructure spending could affect the industries which we serve," Rolls said.