US firm swoops as a2 boss sells shares
A $4.36 million share selloff by The a2 Milk Company’s chief executive, Jayne Hrdlicka, has attracted the attention of United States investment company BlackRock, which immediately bought an opportunistic 5.21 per cent stake in the company.
New Zealand Shareholders Association (NZSA) chief executive Michael Midgley said his organisation was disappointed by the ‘‘bad look’’ created by Hrdlicka’s selloff.
‘‘It leaves a bad taste in one’s mouth. One would have expected that better ways could have been found so if there were obligations that had to be met, there would have been a plan not to sell the whole lot and leave a bad impression.’’
Hrdlicka, who was previously the head of Jetstar, said she had sold her shares to meet tax obligations.
The dairy company’s share price dropped 5.5 per cent to $11.81 on Monday, wiping $450m off the value of the company, and yesterday it had barely risen above that level.
The Australian Financial Review
reports Hrdlicka’s fixed contract is for $1.5m a year, and her short-term incentive package is worth the same, with another 20 per cent on top of that being at the board’s discretion.
‘‘Add up every potential source of remuneration and if she hits all her targets, she could be making $6.7m in her first year.’’
The AFR said that as Hrdlicka had to give up short- and long-term payments at Jetstar’s parent company, Qantas Airways, a2 Milk gave her a one-off cash payment of $600,000 and 599,245 rights to a2 Milk shares to replace 80 per cent of her forfeited Qantas stocks.
Midgley said the NZSA was opposed to ‘‘signing-on gifts, and if it must be done it should be by way of cash and not shares’’.
Christchurch financial adviser Alistair Bean, who has 75 per cent of his portfolio in The a2 Milk Company, said he was not ‘‘too concerned’’ about the impact of Hrdlicka’s actions.
‘‘It’s a bit odd that a CEO would dispose of all of their available shares, but at the announcement of her appointment it showed her transition benefits and that she had shares available to sell from August 28,’’ he said.
‘‘But for any CEO of any company to sell everything they’ve got in one go is a bit eyebrow raising.’’
Bean believed a2 Milk had a lot of future value, following news of its penetration in overseas markets and its recent agreement with Fonterra. Last week ratings firm Morningstar priced a2 Milk shares at $14.60.
Bean said he had a lot of exposure to the company simply because he had first bought shares at 46 cents each, up until they reached $4, and the weighting reflected the rise in value.
‘‘The company’s a bit of a freak – it’s a huge New Zealand success story. There’s just no reason to sell; to me it’s the Coca-Cola of our age,’’ Bean said.
Harbour Asset Management managing director Andrew Bascand said that besides the 734 million shares bought by BlackRock, which is the world’s largest investment company, Colonial First State was a ‘‘comfortable, huge owner’’.
Bascand viewed the fall in the share price as an over-reaction to Hrdlicka’s selloff but said she still had a large exposure to a2 Milk.
He described the company as transparent and focused, and was impressed with what he had seen on a recent trip to China where he had visited infantformula companies, retail outlets, and investigated e-commerce opportunities.
‘‘I saw steady pricing, and continued premiumisation. Most commentators talk about ongoing double-digit volume growth in the market.’’
Bascand had met twice with a2 Milk executives and sensed that sales and margins were performing to plan.
‘‘For any CEO of any company to sell everything they’ve got in one go is a bit eyebrow raising.’’
Financial adviser Alistair Bean