IoD criticises 2016 bonus award for Rolls chief Warren East

The bonus award for Rolls Royce chief Warren East for 2016 was ill advised, according to a well-known business lobby group.

"Bonuses need to be linked to performance and at Rolls-Royce it’s been a difficult 12 months," Oliver Parry, the IoD's head of corporate governance, told Bloomberg in an interview.

"The idea that the CEO is receiving a bonus after two profit warnings doesn't sit very well with investors."

East was handed 55.0% of his maximum possible award after beating targets for profit and cash, the company said in its annual report.

His 2016 award was £916,000.

Rolls Royce's full-year adjusted pre-tax profit declined 49% to £813.0m but was still better than the £685.0m which analysts had penciled in amid operational improvements that boosted cash flow to £100.0m, easily surpassing the between -£100.0m and -£300.0m which the company had guided towards.

However, investors are clamouring for strategic initiatives to right the company's course.

As of 1242 GMT shares in Rolls Royce were 0.6% higher at 769.0p.