11 February 2019
Royal London Asset Management (RLAM) has called on Ryanair to re-tender the contract for its independent auditor as it believes that KPMG has served for too long to be able to provide ‘independent oversight’.
The asset manager of UK mutual insurer Royal London Group, which holds 366,258 shares in the Irish company, said it would ‘encourage a re-tender’ of its independent auditor as KPMG had held the role for more than 30 years.
The accountancy firm carried out its first audit of the company in 1985.
In its 2018 annual report, Ryanair stated that it was satisfied with their “effectiveness, objectivity and their independence”.
The company explained that as a result of the EU audit reform, which came into effect in June 2016 and introduced mandatory rotation of audit firms, it will be required to change auditor for the financial year ending 31 March 2024 but has given no indication that it might change it beforehand.
RLAM said it considered KPMG’s tenure ‘too long to provide an effective independent oversight’.
In addition to the change of auditor, RLAM outlined three other measures that it would like to see the airline take in order to improve the oversight of the board and toughen its approach to governance.
It called for the remuneration committee to be ‘wholly independent’, referencing the fact that former company executive, Howard Millar, is the current chair of the committee and that current deputy chairman and future chairman Stan McCarthy also serves on the committee.
RLAM also said it wants more ‘international experience’ on the board, with specific reference to non-executive directors and that it holds concerns around the granting of share options to Non-executive directors.
Last week, RLAM told Insurance Asset Risk the announcement of Ryanair longstanding chairman David Bonderman stepping down in the summer of 2020 did not go ‘far enough’ in addressing its concerns on the company’s governance.
Ashley Hamilton Claxton, RLAM head of responsible investment, said: “We would like to see the new chairman undertake a comprehensive board review with a view to putting in stronger governance standards to support the growth plans of the business.”
Ryanair has been approached for comment but has not yet responded.