AO to restructure its all-employee Value Creation Plan

AO has announced a proposal to restructure its all-employee Value Creation Plan (VCP).

The VCP was initially introduced to “incentivise and reward exceptional performance” by AO employees and retain and recruit talent. 

Given the ongoing cost of living crisis, the electrical retailer has said the current scheme is “significantly underwater” and it is revamping the programme to provide “appropriate targets to motivate the team and drive exceptional performance.”

AO will be putting forward a new VCP for shareholder approval at the 2022 AGM that will replace the current VCP. 

The new plan will begin funding at a share price of £1 and the funding rate of the scheme has been reduced from 10% of value created above the threshold to 5.5%.  

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In each case, 30% of the plan value will be allocated in total to the two current executive directors and the COO, 10% each, capped, should the share price reach £7.32, at a total pay-out of £20m for each.

The remaining 70% will be allocated to all current and future employees to make this the “most inclusive value creation scheme in the FTSE today.”

The plan would be capped on achievement of a £10.43 share price, equivalent to a £6bn market cap.

“This revised VCP remains a very ambitious plan rewarding truly exceptional performance, designed with safeguards, such as phased vesting, a capped opportunity for the Directors, and enhanced Remco discretion, to underpin sustainable value creation for all shareholders,” AO said in a release. 

In addition, AO’s Founder and Chief Executive Officer, John Roberts has committed to donate 100% of any VCP reward he receives to help disadvantaged young people in the UK.

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