Hrdlicka to sell a2 shares for tax
Milk company chief defends selling part of transition package, saying she intends to build up shareholding
A2 Milk Company chief executive and managing director Jayne Hrdlicka intends to sell some of her newly acquired a2 Milk shares to cover her Australian tax obligations but she also wants to build a shareholding in the company.
Dual-listed a2 Milk said yesterday that the last tranche of transitional rights used to entice Hrdlicka away from her previous employer — Qantas — had vested.
“In Australia the tax obligation sets in upon vesting of the shares,” Hrdlicka told the Herald.
“I will at some point need to sell a portion of my shares to cover the tax obligation as well as other financial
investment obligations,” she said.
“This tranche of shares, however, will also be used to begin building a share position which will ultimately be at least equal to my fixed remuneration,” she said.
The 90,914 vested shares were worth $1.26 million at yesterday’s prices.
Hrdlicka caused a stir last September when she sold about 340,000 shares in a2 Milk for a total of around $4.3m. It was a sensitive time for the stock because China had just introduced a new e-commerce law, with implementation also coinciding with the end of the cross-boarder e-commerce (CBEC) rules.
Fund managers and commentators were quick to criticise the sale.
While Hrdlicka clearly had valid reasons for the share sale, it was still “very disappointing” to see her offload all her ordinary shares so soon after joining the company at a time when its growth could be challenged due to a maturing Chinese infant formula market, influential Australian research firm Motley Fool said.
In a notice to the NZX yesterday a2 Milk said the time-based rights were granted as a one-off transition benefit as compensation for the forfeiture of incentive entitlements from Qantas.
As part of her package, Hrdlicka settled on compensation of about two-thirds of the value of her then Qantas entitlements.
A2 Milk regards the “transition” shares — compensation for value foregone as a result of Hrdlicka’s move away from Qantas — as being separate from any awards that might occur under incentive schemes.
Hrdlicka was chief executive of the Qantas unit Jetstar Group for five years before she joined a2 Milk.
A2 Milk last week reported a 47 per cent leap in net profit to a record $287.7m for the June year — the first full year under Hrdlicka’s control.
The alternative milk and infant formula company’s earnings before interest, tax, depreciation and amortisation (ebitda) jumped by 46.1 per cent to $413.6m, driven by a 41.4 per cent lift in turnover to $1.31 billion.
Hrdlicka might have just completed her first full financial year but she has already cemented in some far-reaching changes.
A2 Milk has close to half a billion dollars cash on its balance sheet and it level pegs with Meridian as one of New Zealand’s biggest companies.
Most cows carry both A1 and A2-type proteins, but a2 Milk specialises in milk containing just the A2 variety, which it says can help people who have trouble digesting standard milk.
Despite the record earnings, a2 Milk’s share price came under under downward pressure just after last week’s result.
A2 shares closed yesterday at $14.24, down 1c, but well off its low for the day of $13.75.