BRITAIN’s largest aerospace and defence groups, Rolls-Royce and BAE Systems, have asked the government to break with tradition and let them appoint a foreign chief executive.

Simon Robertson, chairman of Rolls-Royce, and Dick Olver, chairman of BAE, are holding talks with Downing Street and the Ministry of Defence.

The government’s golden share in the companies means they need permission from ministers to select a nonBritish leader. Selection of a foreigner is expressly forbidden by both companies’ articles of association. According to a government source, BAE’s need is more pressing because it is actively looking for a successor to Mike Turner, who stands down in August.

There are several potential American candidates, including Walt Havenstein, head of the company’s American operations.

Chip Goodyear, the American former head of BHP Billiton, is also seen as a potential successor to Turner.

Rolls-Royce wants to prepare for when Sir John Rose, its chief executive, retires. No date has yet been set for his departure, and a company spokesman said last night: “Sir John has no intention of leaving.”

BAE and Rolls-Royce have a close relationship with the government, which relies on them for technology critical to national defence.

Rolls-Royce makes reactors for Britain’s nuclear submarines, while BAE is behind most of the country’s advanced weapons systems, including Eurofighter and the Type 45 frigate.

Through its so-called golden share - expressed by special clauses in the companies’ articles of association - the government has exercised strict controls.

Until 2002, foreign investors were prevented from owning more than 49.5% of either group. Individual foreign shareholders, or groups deemed to be acting in concert, are still barred from holding more than 15% each.

There are also restrictions on the companies’ leadership. A majority of directors must be British, as should the most senior executive director.

One analyst said: “These are two international companies and it’s ludicrous that they are unable to tap into the global talent pool. They must be given the option to do so.”

Rose, one of the FTSE 100’s longest-serving chief executives, has helped pilot Rolls-Royce toa powerful position in aero-engine manufacture. A possible successor could be Ian Conn, BP’s head of refining and marketing, and a Rolls-Royce nonexecutive.

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