Published on July 21st, 2020 | by The GC Team0
AO proposes employee incentive plan as it benefits from consumer shift to online purchasing
Online electricals retailer AO is proposing employees share in its success via a Value Creation Plan, as the company benefits from the accelerated structural shift to online in the UK and Germany.
The move follows a review of the business’s remuneration structure, with the proposed VCP designed and developed to support a high growth strategy driven by “an unwavering focus on customer proposition and excellent execution”.
Measured over a five- to seven-year period, the scheme 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 the business’s 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 employees in contrast to other UK Value Creation Plans.
The company said awards to Executive Directors will be capped at £20million, but to realise the full benefit of the scheme it 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’s Founder and Chief Executive John Roberts has committed to donate 100% of any VCP reward he receives to help disadvantaged young people in the UK.
“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,” Roberts commented.
“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.”