AO World of­fers staff £140m in­cen­tive if com­pany value soars

The Daily Telegraph - Business - - Business - By

Laura Onita

EM­PLOY­EES of AO World could be re­warded with a bumper bonus scheme af­ter the on­line white goods seller over­hauled its pay struc­ture.

About 3,000 staff could be in line for a £140m pot – but only if the com­pany’s value surges to £4.5bn by 2027. It is worth less than £800m based on its present share price of 164p.

Bosses hope that the move will mo­ti­vate staff to work to­wards that tar­get and help AO re­tain top tal­ent.

The plan will be ac­ti­vated when the share price hits £5.20 ini­tially, valu­ing the com­pany at £2.5bn, but un­til then they get noth­ing. Above that bench­mark, 10pc of the value cre­ated will be shared be­tween all em­ploy­ees.

AO said that to re­ceive the full ben­e­fit of the scheme, its share price would have to be at least £9.40, valu­ing the com­pany at £4.5bn. It would also have to main­tain that val­u­a­tion for at least two years un­til March 2027.

Bonuses to ex­ec­u­tives will be capped at £20m. “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,” said John Roberts, founder and chief ex­ec­u­tive. He listed the group in 2014 at 285p a share and holds a 23pc stake.

“[The scheme] is a vote of con­fi­dence in our peo­ple and the fu­ture.”

Any wind­fall Mr Roberts re­ceived from the plan would be do­nated to a youth char­ity. Share­hold­ers will vote on the plan next month.

AO posted a 15.9pc jump in sales to £1bn for the year to the end of March. Sim­i­lar to Ocado, the on­line gro­cer, it has sold to a wave of new shop­pers in lock­down and be­lieves they will con­tinue to buy on­line.

AO’s top team was paid £2m in the last fi­nan­cial year, in­clud­ing £732,924 for Mr Roberts. He set up the busi­ness two decades ago af­ter a pub bet to sell fridges on­line. He re­turned to run the busi­ness in 2019 af­ter then-chief ex­ec­u­tive Steve Caunce stepped down.

AO has been in turn­around mode since, and it stopped sell­ing elec­tri­cals in the Nether­lands be­cause it was not mak­ing any money. Mr Roberts still holds high hopes that Ger­many, an­other chal­leng­ing mar­ket, will help lift sales and prof­its long term.

The re­tailer also makes money from sell­ing war­ranties and it has been tri­alling a scheme that al­lows con­sumers to rent their ap­pli­ances for a fixed fee. It also has a re­cy­cling plant and a lo­gis­tics busi­ness on top of that.

Two years ago it bought an on­line mo­bile phones busi­ness for £38m, which has been do­ing well as sil­ver surfers up­grade their de­vices to stay in touch with their fam­i­lies.

Newspapers in English

Newspapers from UK

© PressReader. All rights reserved.