AO World proposes all-staff value-based incentive plan

AO World announced its proposal for an all-employee ‘Value Creation Plan’ on Tuesday, in which all 3,000 staff would benefit.

The FTSE 250 online appliance retailer said the plan was aimed at incentivising and rewarding exceptional performance, and retaining its talent, while driving value creation for shareholders.

Measured over a five-to-seven year period, it would reward value creation above a hurdle of £5.23, equivalent to a £2.5bn market capitalisation, representing “exceptional” growth of around 30% per annum from Tuesday, and also compound annual growth of 5.7% since its initial public offering in 2014 when the share price was £2.85.

Over that hurdle, 10% of value created would be shared between all AO employees.

Awards to executive directors would be capped at £20m, but to realise the full benefit of the scheme, the company said it would need to achieve a share price of at least £9.41, equivalent to a £4.5bn market capitalisation, with that value maintained for at least two further years to March 2027.

The board said that in recent months, its remuneration committee had spent “substantial time” in reviewing the remuneration structure in place at the firm.

It said the outcome of the review, and following consultation with a large number of shareholders, was to propose a “new, unique one-off all-employee incentive plan”, dubbed the AO Value Creation Plan.

The proposed plan had been designed and developed to support AO's high growth strategy, the directors explained, which was driven by “an unwavering focus” on customer proposition and excellent execution.

“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,” said founder and chief executive officer John Roberts.

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

Roberts said AO was now set up to benefit from the accelerated structural shift to online in the UK and Germany, describing its model as “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.”

At 0825 BST, shares in AO World were up 3.29% at 170.22p.