Defence Giant BAE Puts New Chief On Radar

Britain's biggest defence company, BAE Systems, has begun preparing the ground for the departure of its long-serving chief executive.‎

Sky News can exclusively reveal that Sir Roger Carr, BAE's chairman, has asked the top City headhunter Spencer Stuart to begin a "horizon-scanning" exercise‎ to identify potential successors to Ian King.‎

Mr King, who has run BAE since 2008, has no immediate plans to step down, and insiders believe that a change of leadership could still be at least two years away.

However, the fact that Sir Roger is laying the groundwork for such a move underlines the long-term nature of succession planning in an industry such as defence.‎

BAE is by far the biggest defence company in the UK. ‎Its most prominent ‎products include the Eurofighter Typhoon, Challenger tanks and the Royal Navy's Astute class submarines.‎ ‎

News of BAE's preparations for a change of leadership comes just weeks after George Osborne pledged that Britain would meet a NATO commitment to spend at least ‎2% of its GDP on defence.

Labour said the Chancellor would have to rely on "creative accounting" by including intelligence spending in the total in order ‎to fulfil his promise.‎

Under Mr King's stewardship, BAE has been through a tumultuous period in which it abandoned a proposed merger with the European defence and aerospace group EADS.‎

That deal collapsed in 2012 after opposition from Angela Merkel, the German Chancellor, prompting recriminations from a number of City institutions‎ which questioned Mr King's ability to remain at the helm.

Mr King, who was paid £3.5m last year, has since weathered that storm, delivering‎ efficiency gains amid falling sales.

Those operational improvements have come at the expense of thousands of jobs in the UK, while Mr King warned earlier this year that the Eurofighter's production would be cut without a substantial order this year.‎ ‎

Reduced spending from many governments on conventional defence methods and the changing nature of the global combat threat has also prompted Mr King to expand's BAE investment in cyber-security and other emerging technologies.‎ ‎

In a statement issued to Sky News on Saturday, a BAE spokeswoman said:‎ "BAE Systems is a great business, performing well with a strong, engaged CEO. ‎

"The board is fully supportive of the management team and strategy.‎

"Looking ahead at the future management structure is normal course of business for a well-run company.

"We have not launched a formal succession process; we are simply scanning the horizon as we consider our longer-term needs."‎

The Sunday Times reported earlier this year that BAE wanted David Cameron to approve the appointment of the company's first foreign chief executive.‎ ‎ Such a move is considered highly unlikely, however.

Owing to the secrecy of much of its work, BAE's national security clearances‎ mean that its American subsidiary must be run by a US national, with the same principle applying to its UK-domiciled parent.‎

BAE is a top-ten supplier to the Pentagon, and is expected to benefit from a recovery in US defence spending.

It is unclear whether BAE's ‎finance director, Peter Lynas, or other senior executives will be among the long-term contenders to succeed Mr King.

Earlier this week, Michael Fallon, the Defence Secretary, warned defence companies‎ not to "pad profit margins through fat government contracts".

"There will be no let-up in our demand for full value for every tax pound spent," he said.

Relations between BAE and Whitehall are said to be strong, with Sajid Javid, the Business Secretary, recently endorsing a report highlighting the company's contribution to the British economy.‎