A2 discloses pay for new CEO

A2 Milk Company’s new interim chief executive Geoffrey Babidge will be paid $1.6 million including superannuation, but can earn an extra 20-to-40 per cent more of his total fixed remuneration as a short term incentive.

On Monday A2 announced on the New Zealand Stock Exchange that former chief executive and managing director Jayne Hrdlicka had ‘‘agreed to step down’’.

Babidge was previously A2’s managing director. His short term incentive would be ‘‘payable entirely at the discretion of the board’’ at the end of his tenure.

He said he was pleased to be back.

‘‘Since my retirement in July 2018, I have closely monitored the company and its progress. I have also had some time off to recharge and I’m excited to be back and working with the team.’’

The milk company sells milk which comes from cows that naturally produce milk with the A2 version of beta-casein, rather than the A1 version of the protein.

It says A1 can impact the digestive system and has been linked to ailments including irritable bowel syndrome, eczema and diabetes.

A2’s popularity has rocketed in recent years, taking its share price with it. The company holds intellectual property including patents and trademarks for a2.

But Hrdlicka’s shock exit saw A2 shares slide, and the Shareholders Association blasted the company saying Hrdlicka’s exit was ‘‘a classic example’’ of why it opposes ‘‘golden handshakes, time-only payments and the like’’.

Hrdlicka sold off $4.36m worth of A2 shares after only two months in the job last year.

She earned A$2.08m (NZ$2.19m) in a fixed remuneration payment of A$1.5m and a ‘‘transition benefit’’ of A$586,666.

Hrdlicka was also owed a ‘‘potential short term incentive’’ payment of A$1.8m for the year, which would be paid after the publication of the audited results. If received, that would take her total pay to A$3.88m.

Hrdlicka said she was leaving due to the amount of travel needed for the role.

Shareholders Association chief executive Michael Midgley said A2’s board was ‘‘naive and excessively generous’’.

She knew A2 was a ‘‘worldwide company’’ when she took on the job, he said.

‘‘It should not have come as a surprise that there was going to be a lot of travelling. The A2 board must be held to account. If there are any outstanding payments, other than base salary to the resignation date, then the board must use every legal avenue to deny them to Hrdlicka,’’ he said.

A2 chairman David Hearn told investors ‘‘there are confidentiality provisions’’ in relation to Hrdlicka’s exit.

He said the board would work closely with Babidge to ‘‘prosecute’’ its current strategy while searching for the right fulltime candidate to take the company forward. A global search for a new chief executive would start immediately.