A2 seeks hefty fees hike for directors
Directors of dairy marketer The
a2 Milk Company will receive a big fee hike if a proposed resolution is passed at the company’s annual meeting today.
Chairman David Hearn’s fee will rise 37.5 per cent to $165,000, as will those of the three independent non-executive directors, who will be paid a similar amount.
Deputy chairwoman Julia Hoare is set to receive $210,000, up
27.3 per cent. Her fee is higher than Hearn’s because he has an executive role in relation to the company in Europe and the United Kingdom.
Frequent critic the New Zealand Shareholders Association (NZSA) has given a qualified blessing to the fee rises, acknowledging that the company has grown and performed well over the past few years, and that shareholders have benefited.
‘‘In our view, the proposed fees are towards the top of the scale, and, unless there are extenuating circumstances, we would not expect the board to come back to shareholders seeking a further increase for at least two years.’’
However, in a preview report the NZSA blasted a2 Milk chief executive Jayne Hrdlicka for pocketing $4.36 million through cashing in shares when she was only two months into the job. The company said at the time that she did so to meet tax obligations and commitments made before she joined the company.
Hrdlicka’s package is in excess of $9m for her first year, made up of a base salary of $1.61m, a signing-on bonus of $630,000, and 599,254 share options that she can exercise between August 2018 and August next year.
Having now sold the bulk of her shares, Hrdlicka has a balance of 242,022 that she can dispose of up to August next year. If sold at the current share price, these would realise $2.63m.
‘‘In our view, Ms Hrdlicka has impacted on confidence in the company by her (completely legal) actions in selling, and this must raise questions about her judgement. If the situation was unavoidable, it would surely have been better for A2 Milk to disclose the need to sell at the time when she was employed, rather than after the event,’’ the report said.
The NZSA said the board was at fault for allowing the situation to arise, and that to provide a signing-on bonus of about $7m with no performance component was ‘‘remarkable’’.
‘‘To do so for a new CEO who has no great experience in A2 Milk’s field of business is unprecedented.’’
The NZSA opposed a resolution that Hrdlicka be appointed managing director on the grounds that there should be a clear separation of the governance and management roles. It said the chief executive should report to the board and not be a ‘‘first among equals’’.
Meanwhile, Swiss banking giant UBS has splashed out $379m on a2 Milk shares to give it a
5.07 per cent holding in the company.
a2 Milk’s share price has fallen from a high of $14.10 to
$10.31 yesterday, although as recently as 2015 the shares could be picked up for 50 cents each.
While most cows carry both
A1 and A2 proteins, The a2 Milk Company’s product comes from herds that that produce milk naturally free of the A1 protein.
Production of A1 or A2 type milk depends on a cow’s genetics.
Research indicates A2 may be healthier for people who are susceptible to diabetes, heart disease, autism, schizophrenia and Crohn’s disease.