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