Rolls-Royce has appointed Bradley Singer, chief operating officer at ValueAct Capital, the American investment company, to its board. He will join as a non-executive director immediately and will also be a member of its science and technology committee.
The move follows months of lobbying by ValueAct for the Derby-based engineering company to improve its financial performance. ValueAct became the largest shareholder of Rolls-Royce after purchasing a 5.5% stake in July 2015 and an additional stake in November, taking its total holding in the company to 10.8%. It pressed for board representation, saying it wanted to work with the company to improve its performance. After some reluctance, Rolls-Royce seems to have given in.
The move follows weak financial performance of Rolls-Royce, which has not only announced a string of profit warnings in recent times but also cut its dividend for the first time in 25 years last month. Warren East, CEO at Rolls-Royce, who took up the lead role in July 2015, has since announced a slew of measures such as axing 50 directors to turn around the company, which operate in a range of businesses that include making marine engines and reactors for nuclear submarines.
Apart from Rolls-Royce, ValueAct has asked for changes at 75 other companies since its co-founder Jeffrey Ubben launched the investment firm in 2000. Ubben has also been instrumental in corporate shakeups such as the departure of Steve Ballmer, former chief executive at Microsoft.
ValueAct reportedly seeks to set itself apart from aggressive US activists such as Carl Icahn and Bill Ackman, who use public campaigns to ensure the board listens to them. In contrast, the San Francisco-based investment company represents itself as a low-key investor who sticks to its investments for a long period of time. ValueAct works in a way similar to a private equity firm and participates in the companies it invests to help improve their performance.