London, Jan 18, 2026, 08:06 GMT — Market closed.
- Rolls-Royce ended Friday at 1,285.5 pence, climbing 0.98%.
- Reports indicate the group plans to raise CEO Tufan Erginbilgic’s cap on bonus and long-term incentive awards.
- Investors eye the full-year results set for Feb. 26, with hopes for an update on the 2026 buyback plans.
Rolls-Royce Holdings plc (RR.L) starts the week with a pay vote looming, following a Financial Times report that the engine manufacturer is working on a new remuneration policy to boost CEO Tufan Erginbilgic’s incentive limits. Shares closed Friday at 1,285.5 pence (£12.86), up 0.98%. According to the FT, the annual bonus cap would jump from 200% to 300% of salary, while long-term incentive plan (LTIP) awards, usually shares vesting over several years, are set to double from 375% to 750%. (Financial Times)
For a stock now synonymous with turnaround hope in London, the pay reset serves as much as a governance challenge as a reward. Major shareholders will scrutinize if the package aligns with performance and if it’s enough to retain management, especially as boards face growing pressure over pay decisions.
The timing is crucial as Rolls-Royce operates in both civil aerospace and defence—sectors now swayed by geopolitics. Britain’s aerospace and defence index surged 1.25% on Friday after President Volodymyr Zelenskiy declared a state of emergency and the UK committed £20 million in energy aid to Ukraine, according to a Reuters report. Shares of BAE Systems climbed 1.4%, while Babcock added 1%. (Reuters)
Sky News said the proposals come from Lord Jitesh Gadhia, who leads the remuneration committee, with the board throwing its weight behind the review. A company spokesperson highlighted a “step-change in performance,” while Stephen Anness, Invesco’s global equities chief, called it “one of the most successful corporate turnarounds.” Rolls-Royce’s market value stood around £108 billion at Friday’s close, Sky News noted, adding that more details on the policy are expected in the annual report due in March. (Sky News)
The annual bonus pays out based on short-term targets over one year. The long-term plan typically involves share awards vesting across multiple years; raising the cap increases the maximum possible payout but doesn’t change the guaranteed amount.
Traders are focused on how governance advisers and major index funds respond, and if any pushback sparks selling once London’s markets open. Often, the debate shifts away from pay to questions about whether the company’s next phase will be as smooth as the previous one.
Rolls-Royce’s earnings hinge on airline flying hours, major engine servicing, and defense contracts. This blend leaves the shares vulnerable to sudden swings in travel demand, supply-chain disruptions, and defense budgets.
The proposal still requires shareholder approval, and even a successful vote could come at a cost. If the stock dips or the broader market slides, investors might grow less tolerant of high incentive caps.
Investors are also watching a more immediate event: Rolls-Royce is conducting a £200 million interim share buyback that must wrap up by Feb. 24, 2026. This falls just before the company’s 2025 full-year results, due Feb. 26, 2026. Rolls-Royce has indicated it will reveal the total size of its 2026 buyback program when those results are released. (Rolls Royce)
