AO World staff promised bonuses – if shares rise 200%

Bolton-based online electrical retailer AO World on Tuesday announced a bonus scheme for its 3,000 staff — but the plan would only be triggered if the company’s shares rise more than 200% from current levels.

The so-called AO Value Creation Plan (VCP) would reward value created above a share price hurdle of £5.23 — representing growth of about 30% a year from Monday’s closing share price of £1.64.

For staff to realise the full benefit of the scheme, the firm’s shares would need to reach at least £9.41 with that value maintained for at least two further years to March 2027.

In a stock exchange statement, AO World said: ” … the company is proposing to introduce a new, unique one-off all-employee incentive plan – the AO Value Creation Plan (VCP) …

“Measured over a five to seven year period, it rewards the value creation above a hurdle of £5.23 (equivalent to £2.5bn market cap) representing exceptional growth (c. 30% p.a.) from today and also compound annual growth of 5.7% since our IPO in 2014 (when the share price was £2.85). 

“Over that hurdle, 10% of value created will be shared between ALL AO employees, with the overwhelming majority distributed to all employees in contrast to other UK VCPs.

“Awards to executive directors will be capped at £20million, but to realise the full benefit of the scheme, we would need to achieve a share price of at least £9.41 (equivalent to £4.5bn market cap) and that value must be maintained for at least two further years (March 2025 – March 2027).” 

AO founder and chief executive John Roberts would donate 100% of any VCP reward he receives to help disadvantaged young people in the UK. 

Roberts said: “This is the AO Way of doing a Value Creation Plan. 

“The decision to create an opportunity for every AO employee to receive a meaningful reward for the value they create is one that I’m proud to tell my mum about.

“The AO VCP rewards exceptional performance and value creation and we will achieve it through our passion to serve customers brilliantly with a long term lens. 

“AO is now set up to benefit from the accelerated structural shift to online in the UK and Germany and our model is now truly scalable.

“It is a vote of confidence in our people and the future we’re building as well as the embodiment of our One AO model because it rewards the exceptional value that the AO team is capable of creating together.”

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Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.