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New A2 Milk Company Ltd (ASX:A2M) CEO to start this month

The A2 Milk Company Ltd (ASX: A2M) share price hasn’t been the best performer on the market today

In late morning trade the infant formula and dairy company’s shares are down 1% to $10.40.

This decline comes despite the company announcing that its new managing director and CEO, Ms Jayne Hrdlicka, will finally take up these roles on Monday, July 16 2018.

In December a2 Milk Company announced her appointment but advised that she would not be able to commence the roles until the start of FY 2019 due to her commitments with Qantas Airways Limited (ASX: QAN) as the CEO of the Jetstar Group.

But those commitments have now be served and Ms Hrdlicka will soon replace the retiring Geoffrey Babidge, who had been in the role since 2010. Babidge will stick around until December to assist with the transition.

According to the release, Hrdlicka will be paid $1.5 million per year, reviewed annually, with a yearly bonus of up to 100% of her salary based on performance against key indicators. The A2 board can, however, also increase or decrease that by 20% on its own assessment of her performance.

In addition to this, in exchange for the short and long-term incentives given up by leaving Jetstar Group, A2 Company has agreed to pay Ms Hrdlicka $586,666 and give her time-based rights for just 599,254 shares to vest between August this year and August next year.

What’s next?

A change of CEO transition is never easy, however, I feel Ms Hrdlicka has the experience to be able to replace Mr Babidge successfully and take a2 Milk through its next growth phase.

As well as being the CEO of the Jetstar Group, she has served as a non-executive director at Woolworths Limited (ASX: WOW) and a partner at Bain & Company in the United States. The latter role was focused on customer orientated businesses.

Should you invest?

I expect it to be business as usual for a2 Milk in FY 2019 thanks to the insatiable demand for its products in China. In light of this, I think that the company would still be a great long-term investment despite Mr Babidge’s retirement and would suggest investors consider picking up shares on this weakness.

As well as a2 Milk Company, I think these four top shares are strong buys today.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of A2 Milk. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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