AGM Information • Mar 31, 2018
AGM Information
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If you have sold or otherwise transferred all of your AO World Plc ordinary shares, please send this document, together with the accompanying documents (but not the personalised Form of Proxy), as soon as possible to the purchaser or transferee, or to the stockbroker, bank or other agent through whom the sale or transfer was effected, for delivery to the purchaser or transferee.
This document is also available at ao-world.com.
AO World Plc (incorporated and registered in England and Wales under number 05525751) NOTICE OF ANNUAL GENERAL MEETING
Notice of the Annual General Meeting of AO World Plc to be held at 8 am on Thursday 19 July 2018 at AO Manchester, Baskerville House, Browncross Street, West Riverside, Salford M60 9HP is set out at the end of this document.
A Form of Proxy for use at the Annual General Meeting is enclosed.
To be valid, the Form of Proxy should be completed and returned in accordance with the instructions printed thereon as soon as possible but in any event so as to arrive not later than 8 am on Tuesday 17 July 2018.
Please note that the Form of Proxy can be delivered in hard copy form by post, by courier or by hand to Link Asset Services at the address printed on the back of the Form of Proxy or, if preferred, in an envelope to FREEPOST PXS, 34 Beckenham Road, BR3 9ZA (please note delivery using this service can take up to five business days) or by completing it online at www.aoshareportal.com. CREST members may utilise the CREST electronic proxy appointment service.
Numis Securities Limited ("Numis") is acting as financial adviser to the Company in connection with the Waiver Resolutions and no-one else and will not be responsible to anyone other than the Company (whether or not a recipient of this document) for providing the protections afforded to clients of Numis nor for providing advice in relation to the proposals described in this document or any other matter referred to in this document. Persons other than the Company are recommended to seek their own financial and other professional advice. Apart from the responsibilities and liabilities, if any, which may be imposed on Numis by the Financial Services and Markets Act 2000 or the regulatory regime established thereunder, Numis accepts no responsibility or liability whatsoever for the contents of this document or for any other statement made or purported to be made in connection with the Company or the Waiver Resolutions. Numis accordingly disclaims all and any responsibility or liability whether arising in tort, contract or otherwise (save as referred to above) which it might otherwise have in respect of this document or any such statement.
Registered Office: Directors:
AO Park Geoff Cooper 5A The Parklands John Roberts Lostock Steve Caunce Bolton Mark Higgins BL6 4SD Brian McBride Chris Hopkinson Marisa Cassoni 20 June 2018 Jacqueline de Rojas CBE
To the holders of AO World Plc ordinary shares
Dear Shareholder
I am pleased to be writing to you with details of our Annual General Meeting ("AGM") which we are holding at AO Manchester, Baskerville House, Browncross Street, West Riverside, Salford M60 9HP on Thursday 19 July 2018 at 8 am.
The formal notice of meeting and the resolutions to be proposed are set out on pages 3 to 4 of this document. Resolutions 1 to 15 (inclusive) and 19 to 21 (inclusive) are proposed as ordinary resolutions, while Resolutions 16 to 18 (inclusive) and 22 will be proposed as special resolutions. The ordinary resolutions will be passed if more than 50% of the votes cast are in favour and the special resolutions will be passed if at least 75% of the votes cast are in favour. Explanatory notes on all the proposed resolutions can be found on pages 5 to 8 of this document including in relation to the Waiver Resolutions described below.
The AGM allows the Board to present the Company's strategy and financial results to shareholders and gives shareholders the opportunity to meet members of the Board and raise questions they may have. Your participation is important to us and we hope to see as many of you as possible. As with many other public companies, voting on all resolutions proposed at the AGM will be by way of a poll as the Board believes this is a more transparent method of voting.
Whether or not you intend to be present at the AGM we ask shareholders to complete, sign and return the Form of Proxy. The Form of Proxy can be delivered in hard copy form by post, by courier or by hand to the Company's Registrars, Link Asset Services at the address printed on the back of the Form of Proxy or, if preferred, in an envelope to FREEPOST PXS, 34 Beckenham Road, BR3 9ZA (please note delivery using this service can take up to five business days). You may wish to take advantage of our registrar's secure online voting service (using the identification numbers stated on the enclosed Form of Proxy) which is available at www.aoshareportal. com. CREST members may utilise the CREST electronic proxy appointment service. Registering your vote, either electronically or by returning a completed From of Proxy, does not prevent you from attending and voting in person at the AGM should you decide to do so.
The Board considers the Resolutions are in the best interests of the Company and its shareholders as a whole, and are therefore likely to promote the success of the Company, save that John Roberts and Steve Caunce (the "Concert Party Directors") make no recommendation to Independent Shareholders with regard to Resolutions 19 and 20 (the "Waiver Resolutions") as, in accordance with the provisions of The City Code on Takeovers and Mergers (the "Takeover Code"), they are considered to be interested in the outcome of the Waiver Resolutions. "Independent Shareholders" where used in this document means the shareholders other than the Concert Party Directors. Accordingly the directors of the Company (the "Directors"), excluding the Concert Party Directors for the purposes of the Waiver Resolutions (on the grounds that they are interested in the outcome of the Waiver Resolutions), unanimously recommend that you vote in favour of the Resolutions as they intend to do in respect of their own beneficial holdings which amount in aggregate to 184,697,670 ordinary shares representing approximately 40.26% of the existing issued ordinary share capital of the Company, save that as required by the Takeover Code, the Concert Party Directors (and persons acting in concert with them) will not vote their aggregate shareholding of 161,479,834 ordinary shares representing approximately 35.20% of the Company's existing issued ordinary share capital on the Waiver Resolutions. In addition, the Concert Party Directors have not participated in the Board's consideration of the Waiver Resolutions.
The Directors excluding the Concert Party Directors (the "Independent Directors"), who have been so advised by Numis, consider the waivers of the obligation that may arise for the Concert Party Directors to make an offer under Rule 9 of the Takeover Code in relation to:
to be fair and reasonable and in the best interests of the Company and Independent Shareholders. In providing its advice to the Independent Directors, Numis has taken account of the Independent Directors' commercial assessments. Accordingly, the Independent Directors unanimously recommend that Independent Shareholders vote in favour of the Waiver Resolutions, as the Independent Directors intend to do in respect of their own beneficial holdings which amount in aggregate to 23,217,836 ordinary shares representing approximately 5.06% of the existing issued ordinary share capital of the Company
Thank you for your continuing support of AO World Plc. I look forward to meeting those shareholders who are able to attend the AGM at 8 am on Thursday 19 July 2018.
Yours sincerely
Geoff Cooper Chairman
NOTICE IS HEREBY GIVEN that the Annual General Meeting of the Company will be held at AO Manchester, Baskerville House, Browncross Street, West Riverside, Salford M60 9HP on Thursday 19 July 2018 at 8 am to consider and, if thought fit, to pass Resolutions 1 to 15 (inclusive), and 19 to 21 (inclusive) as ordinary resolutions and Resolutions 16 to 18 (inclusive) and 22 as special resolutions.
(b) up to a further aggregate nominal amount of £382,323.73 provided that (i) they are equity securities (within the meaning of section 560(1) of the Companies Act 2006) and (ii) they are offered by way of a rights issue to holders of ordinary shares on the register of members at such record date as the Directors may determine where the equity securities respectively attributable to the interests of the ordinary shareholders are proportionate (as nearly as may be practicable) to the respective numbers of ordinary shares held by them on any such record date, subject to such exclusions or other arrangements as the Directors may deem necessary or expedient to deal with treasury shares, fractional entitlements or legal or practical problems arising under the laws of any overseas territory or the requirements of any regulatory body or stock exchange or by virtue of shares being represented by depositary receipts or any other matter,
provided that this authority shall expire at the end of the next Annual General Meeting of the Company or, if earlier, on 18 October 2019, save that the Company shall be entitled to make offers or agreements before the expiry of such authority which would or might require shares to be allotted or such rights to be granted after such expiry and the Directors shall be entitled to allot shares and grant rights pursuant to any such offer or agreement as if this authority had not expired; and all unexercised authorities previously granted to the Directors to allot shares and grant rights be and are hereby revoked.
and shall expire upon the expiry of the general authority conferred by Resolution 15 above, save that the Company shall be entitled to make offers or agreements before the expiry of such power which would or might require equity securities to be allotted after such expiry and the Directors shall be entitled to allot equity securities pursuant to any such offer or agreement as if the power conferred hereby had not expired.
THAT, if Resolution 15 is passed and in addition to the power conferred by Resolution 16 above, the Directors be and they are hereby empowered pursuant to section 570 and section 573 of the Companies Act 2006 to allot equity securities (within the meaning of section 560 of that Act) for cash pursuant to the authority conferred by Resolution 15 above and/or by way of a sale of treasury shares as if section 561(1) of that Act did not apply to any such allotment, provided that this power shall:
(a) be limited to the allotment of equity securities to any person or persons up to an aggregate nominal amount of £57,348.56; and
and shall expire upon the expiry of the general authority conferred by Resolution 15 above, save that the Company shall still be entitled to make offers or agreements before the expiry of such power which would or might require equity securities to be allotted after such expiry and the Directors shall be entitled to allot equity securities pursuant to any such offer or agreement as if the power conferred hereby had not expired.
THAT approval is granted for the waiver by the Panel on Takeovers and Mergers (the "Takeover Panel") of any obligation that could arise, pursuant to Rule 9 of the City Code on Takeovers and Mergers (the "Takeover Code"), for John Roberts and Steve Caunce (the "Concert Party Directors") and any persons acting in concert with them to make a general offer for all the issued ordinary share capital of the Company following any increase in the percentage of shares of the Company carrying voting rights in which the Concert Party Directors and any persons acting in concert with them are interested resulting from the exercise by the Company of the authority to purchase up to 45,878,848 of its ordinary shares granted to the Company pursuant to Resolution 18 above, provided that such approval shall expire on 18 October 2019 or, if earlier, at the conclusion of the Company's next Annual General Meeting.
THAT approval is granted for the waiver by the Takeover Panel of any obligation that could arise, pursuant to Rule 9 of the Takeover Code, for the Concert Party Directors and any persons acting in concert with them to make a general offer for all the issued ordinary share capital of the Company following any increase in the percentage of shares of the Company carrying voting rights in which the Concert Party Directors and any persons acting in concert with them are interested resulting from: (i) the exercise by the Concert Party Directors of any of the options over: (a) up to 1,504,727 ordinary shares in the capital of the Company granted to them pursuant to the AO World plc performance share plan; and (b) 40,448 ordinary shares in the capital of the Company granted to them pursuant to the AO World plc sharesave scheme; and (ii) (a) the exercise by Steve Caunce of options over; and/or (b) the vesting of awards in favour of Steve Caunce in respect of, up to 900,000 ordinary shares (in aggregate) in the capital of the Company intended to be granted pursuant to the AO 2018 Incentive Plan.
(as such terms are defined in the Companies Act 2006) during the period beginning with the date of the passing of this resolution and ending at the end of the next Annual General Meeting of the Company or, if earlier, on 18 October 2019 provided that the authorised sum referred to in paragraphs (a), (b) and (c) above, may be comprised of one or more amounts in different currencies which, for the purposes of calculating the said sum, shall be converted into pounds sterling at the exchange rate published in the London edition of the Financial Times on the date on which the relevant donation is made or expenditure incurred (or the first business day thereafter) or, if earlier, on the day in which the Company enters into any contract or undertaking in relation to the same provided that, in any event, the aggregate amount of political donations and political expenditure made or incurred by the Company and its subsidiaries pursuant to this Resolution shall not exceed £150,000.
Company Secretary 5A The Parklands
Julie Finnemore, AO World Plc, AO Park, 20 June 2018 Lostock, Bolton, BL6 4SD
Registered in England No. 05525751
Ordinary resolutions require more than half of the votes cast to be in favour of the resolution in order for the resolution to be passed. To pass special resolutions, three quarters or more of the votes cast must be in favour.
The Chairman will present the Annual Report and Accounts for the year ended 31 March 2018 (the "Annual Report") to the AGM. The Annual Report accompanies this document.
The Directors' Remuneration Report is set out in the Annual Report on pages 77 to 90.
Resolution 2 is the ordinary resolution to approve the Directors' Remuneration Report other than the part containing the Directors' Remuneration Policy. Resolution 2 is an advisory resolution and does not affect the future remuneration paid to any Director.
The report gives details of the Directors' remuneration for the year ended 31 March 2018. The report also includes details of the Remuneration Committee's representations and activities. The Company's Auditors KPMG LLP have audited those parts of the Remuneration Report which are required to be audited and their report is issued in the Annual Report.
Resolution 3 is the ordinary resolution to approve the Directors' remuneration policy which is set out in the Directors' Remuneration Report in the Annual Report on pages 79 to 85.
This remuneration policy reflects the renewed executive remuneration framework developed by the Company's Remuneration Committee to ensure the policy continues to support the delivery of our strategy, sustainable growth and shareholder returns whilst properly rewarding and incentivising our executives but at the same time conforming to investor expectations and best practice. Details of the changes to the policy are set out in the Annual Report on page 82.
Once the Directors' remuneration policy has been approved, all payments by the Company to the Directors and any former Directors must be made in accordance with the policy (unless a payment has been separately approved by a shareholder resolution).
If the Directors' remuneration policy is approved and remains unchanged, it will be valid for up to three financial years without a new shareholder approval. If the Company wishes to change the Directors' remuneration policy, it will need to put the revised policy to a vote again before it can implement the new policy.
If the Directors' remuneration policy is not approved for any reason, the Company will, if and to the extent permitted by the Companies Act 2006, continue to make payments to Directors in accordance with the previously approved policy.
Resolution 4 seeks shareholder approval for a new incentive arrangement, the AO 2018 Incentive Plan (the "Plan"). All employees of the Company or any of its subsidiaries (including Executive Directors) are eligible for selection to participate at the discretion of the Board.
The Plan has been designed to reward management for achieving the Company's strategic objectives and providing long-term stewardship. It is proposed to create a single incentive structure which would be used for the majority of eligible employees (including Executive Directors) in lieu of the annual bonus scheme and the annual Performance Share Plan/LTIP award. Under the Plan, part of the value a participant receives will be delivered in cash following the determination of the relevant performance conditions, with the remaining portion being deferred into an award of ordinary shares in the Company. The main terms of the Plan are summarised in Appendix 3 to this document.
Resolutions 5 to 12 inclusive are to approve the election and re-election of the Directors. In accordance with the requirements of the UK Corporate Governance Code (the "Code") all of the Directors are subject to annual re-election or, In the case of Jacqueline de Rojas who has been appointed since the last AGM, election by the shareholders at this year's AGM. As announced on 24 November 2017, Jacqueline de Rojas joined the Board as a Non-Executive Director on 23 November 2017. The Board is recommending the election of Jacqueline as they believe her skills and experience will be of great benefit to the Board.
The Board has confirmed following a performance review that all Directors standing for re-election continue to perform effectively and demonstrate commitment to their roles. The Board has considered whether each of the independent Non-Executive Directors is free from any relationship that could materially interfere with the exercise of his or her independent judgment and has determined that each continues to be considered independent. Chris Hopkinson, whilst not independent for the purposes of the Code, is considered to provide a significant contribution to the Board and the Committee to which he is appointed.
Biographical details of each of the Directors standing for election and re-election are set out on page 9 of this document.
Resolution 13 is to reappoint KPMG LLP as the Company's Auditors, to hold office until the conclusion of the next AGM of the Company.
Resolution 14 authorises the Audit Committee of the Board to set their remuneration.
Resolution 15 deals with the Directors' authority to allot ordinary shares in the capital of the Company without the prior consent of shareholders for a period expiring at the conclusion of the next AGM of the Company.
At the last AGM of the Company held on 21 July 2017, the Directors were given authority to allot ordinary shares in the capital of the Company up to a maximum nominal amount of £382,323.73, equal to one-third of the Company's then issued ordinary issued share capital and up to a maximum aggregate nominal value of £764,647.47 equal to two-thirds of the issued share capital of the Company where an offer is made in connection with a fully pre-emptive rights issue. This authority expires at the end of this year's AGM. Resolution 15 will, if passed, renew this authority to allot, on the same terms.
The Investment Association ("IA") guidelines on directors' authority to allot shares state that IA members will regard as routine, resolutions seeking authority to allot shares representing up to two-thirds of the Company's issued share capital, provided that any amount in excess of one-third of the Company's issued share capital is only used to allot shares pursuant to a fully pre-emptive rights issue.
In light of these guidelines, the Board considers it appropriate that Directors be granted authority to allot ordinary shares in the capital of the Company up to a maximum nominal amount of £764,647.46 representing two-thirds of the Company's issued ordinary share capital as at 14 June 2018 (the latest practicable date prior to publication of this document). Of this amount a nominal amount of £382,323.73 (representing approximately one-third of the Company's issued ordinary share capital) can only be allotted pursuant to a rights issue. The power will last until the end of the next AGM of the Company or, if earlier, on 18 October 2019.
The Directors have no present intention of allotting new ordinary shares other than in relation to the Company's employee share schemes. However, the Directors consider it appropriate to maintain the flexibility that this authority provides.
As at 14 June 2018 (being the latest practicable date prior to the publication of this document) the Company does not hold any shares in the capital of the Company in treasury.
Resolutions 16 and 17 will give the Directors authority to allot ordinary shares in the capital of the Company pursuant to the authority granted under Resolution 15 above for cash without complying with the pre-emption rights in the Companies Act 2006 in certain circumstances. Resolution 16 will permit the Directors to allot:
Resolution 17 will permit the Directors to allot additional equity securities up to a maximum nominal value of £57,348.56 representing approximately a further 5% of the issued ordinary share capital of the Company as at 14 June 2018 (the latest practicable date prior to publication of this document), otherwise than in connection with a pre-emptive offer to existing shareholders for the purposes of financing or refinancing a transaction as contemplated by the Pre-emption Principles described below. The Directors believe that it is appropriate to seek this additional 5% authority in Resolution 17 to give the Company the flexibility that this resolution affords.
This disapplication authority is in line with institutional shareholder guidance, and in particular with the Pre-emption Group's Statement of Principles (the "Pre-emption Principles"). The Pre-emption Principles were revised in 2015 to allow the authority for an issue of shares for cash otherwise than in connection with a pre-emptive offer to include: (i) an authority over 5% of a company's issued ordinary share capital; and (ii) an additional authority over a further 5% of a company's issued share capital for use in connection with an acquisition or specified capital investment announced contemporaneously with the issue, or which has taken place in the preceding six-month period and is disclosed in the announcement of the issue.
The Directors confirm, in accordance with the Pre-emption Principles, that they do not intend to issue shares for cash representing more than 7.5% of the Company's issued ordinary share capital in any rolling three-year period, other than to existing shareholders, save in accordance with Resolution 17, without prior consultation with shareholders.
As noted in relation to Resolution 15 above, the Directors have no current intention of issuing ordinary shares other than in relation to the Company's employee shares schemes.
The authority contained in Resolutions 16 and 17 will expire upon the expiry of the authority to allot shares conferred in Resolution 15 (that is at the end of the next AGM of the Company or, if earlier, on 18 October 2019).
Resolution 18 gives the Company authority to buy back its own ordinary shares in the market as permitted by the Companies Act 2006. The authority limits the number of shares that could be purchased to a maximum of 45,878,848 shares (representing approximately 10% of the Company's issued ordinary share capital as at 14 June 2018 (the latest practicable date prior to publication of this document)) and sets minimum and maximum prices. This authority will expire at the end of the next AGM of the Company or, if earlier, on 18 October 2019.
The Directors have no present intention of exercising the authority to purchase the Company's ordinary shares but will keep the matter under review, taking into account the financial resources of the Company, the Company's share price and future funding opportunities. The authority will be exercised only if the Directors
believe that to do so would result in an increase in earnings per share and would be in the interests of shareholders generally. Any purchases of ordinary shares would be by means of market purchases through the London Stock Exchange.
Listed companies purchasing their own shares are allowed to hold them in treasury as an alternative to cancelling them. No dividends are paid on shares while they are held in treasury and no voting rights attach to treasury shares.
If Resolution 18 is passed at the AGM, it is the Company's current intention to cancel the shares it may purchase pursuant to the authority granted to it except that sufficient shares may be held in treasury to meet the requirements of the Company's employee share schemes. However, in order to respond properly to the Company's capital requirements and prevailing market conditions, the Directors will need to reassess at the time of any and each actual purchase whether to hold the shares in treasury or cancel them, provided it is permitted to do so. As at 14 June 2018 (the latest practicable date prior to the publication of this letter), there were options outstanding to subscribe for ordinary shares in the capital of the Company representing 3.4% of the Company's current issued share capital (excluding treasury shares). If the authority to purchase the Company's ordinary shares being sought in Resolution 18 were to be exercised in full, these options would represent 3.7% of the Company's issued share capital (excluding treasury shares).
Under Rule 9 of the Takeover Code, when (i) any person acquires, whether by a series of transactions over a period of time or not, an interest in shares which, taken together with shares in which he and persons acting in concert with him are interested, carry 30% or more of the voting rights of a company subject to the Takeover Code, or (ii) any person who, together with persons acting in concert with him, is interested in shares which in aggregate carry not less than 30% of the voting rights of a company, but does not hold shares carrying more than 50% of such voting rights and such person, or any person acting in concert with him, acquires an interest in any other shares which increases the percentage of the shares carrying voting rights in which he is interested, then in either case, that person is normally required to make a general offer in cash for all the remaining equity share capital of the company at the highest price paid by him, or any persons acting in concert with him, for shares in the company within the twelve months prior to announcement of the offer.
Under Rule 37 of the Takeover Code, when a company purchases its own voting shares, any resulting increase in the percentage of shares carrying voting rights in which a person or group of persons acting in concert is interested will be treated as an acquisition for the purposes of Rule 9 of the Takeover Code (although a shareholder who is neither a Director nor acting in concert with a Director will not normally incur an obligation to make a Rule 9 Offer).
John Roberts, Founder Director, and Steve Caunce, Chief Executive Director, together the "Concert Party Directors", are considered by the Panel on Takeovers and Mergers (the "Takeover Panel") to be acting in concert for the purposes of the Takeover Code. In aggregate, the Concert Party Directors and persons acting in concert with them hold 35.20% of the issued ordinary share capital of the Company as at 14 June 2018 (being the latest practicable date prior to the distribution of this document).
The Company has applied to the Takeover Panel for waivers of Rule 9 of the Takeover Code in order to permit: (a) the Company to make market purchases as proposed under Resolution 18 (if such authority is approved by shareholders); (b) the exercise by the Concert Party Directors of the Existing PSP Options (as defined in Appendix 2) and the Sharesave Options (as defined in Appendix 2) granted to them under the PSP and the Sharesave Scheme respectively; and (c) the grant to, or exercise by, Steve Caunce of the Proposed Plan Options (as defined in Appendix 2) intended to be granted pursuant to the Plan, in each case without triggering an obligation on the part of the Concert Party Directors and any persons acting in concert with them to make a general offer to shareholders. The Takeover Panel has agreed, subject to Independent Shareholders' approval on a poll, to waive the requirement for the Concert Party Directors and any person acting in concert with them to make a general offer to all
shareholders where such an obligation would arise as a result of: (a) purchases by the Company of up to 45,878,848 ordinary shares; (b) the exercise by the Concert Party Directors of the Existing PSP Options (as defined in Appendix 2) and the Sharesave Options (as defined in Appendix 2) granted to them under the PSP and the Sharesave Scheme respectively; or (c) the vesting in favour of, or exercise by, Steve Caunce of the Proposed Plan Options (as defined in Appendix 2) intended to be granted pursuant to the Plan.
Accordingly the Company intends to seek the approval of the Independent Shareholders for Resolutions 19 and 20, which will be proposed as ordinary resolutions taken as a poll. The Concert Party Directors have confirmed that they and any persons acting in concert with them will abstain from voting on those Resolutions. If Resolution 19 is approved, such approval shall expire on 18 October 2019 or, if earlier, at the conclusion of the Company's next Annual General Meeting.
In the event that the Waiver Resolutions are approved at the AGM, the Concert Party Directors will not be restricted from making an offer for the Company.
Appendix 2 of this document contains certain additional information relating to the Waiver Resolutions.
Resolution 21 deals with political donations. Under the Companies Act 2006, political donations to any political parties, independent election candidates or political organisations or the incurring of political expenditure are prohibited unless authorised by shareholders in advance. What constitutes a political donation, a political party, a political organisation or political expenditure is not easy to decide, as the legislation is capable of wide interpretation. Sponsorship, subscriptions, payment of expenses, and support for bodies representing the business community in policy review or reform, may fall within this.
Therefore, notwithstanding that the Company has not made a political donation in the past, and has no intention either now or in the future of making any political donation or incurring any political expenditure in respect of any political party, political organisation or independent election candidate, the Board has decided to put forward Resolution 21 to renew the authority granted by shareholders at the last AGM. This will allow the Company to continue to support the community and put forward its views to wider business and Government entities without running the risk of being in inadvertent breach of the Companies Act 2006.
The authority is subject to a maximum amount of £50,000 for each type of payment and will cover the period from the date Resolution 21 is passed until the end of the next AGM of the Company or, if earlier, on 18 October 2019. As permitted under the 2006 Act, Resolution 21 also covers any political donations made, or political expenditure incurred, by any subsidiaries of the Company.
Resolution 22 is a resolution to allow the Company to hold general meetings (other than AGMs) on 14 days' notice.
The minimum notice period for general meetings of listed companies is 21 days, but companies may reduce this period to 14 days (other than for AGMs) provided that two conditions are met. The first condition is that the Company offers a facility for shareholders to vote by electronic means. This condition is met if the Company offers a facility, accessible to all shareholders, to appoint a proxy by means of a website. The second condition is that there is an annual resolution of shareholders approving the reduction of the minimum notice period from 21 days to 14 days.
The Board is therefore proposing Resolution 22 as a special resolution to approve 14 days as the minimum period of notice for all general meetings of the Company other than AGMs.
The approval will be effective until the end of the next AGM of the Company, when it is intended that the approval be renewed. The Board will consider on a case by case basis whether the use of the flexibility offered by the shorter notice period is merited, taking into account the circumstances, including whether the business of the meeting is time-sensitive and whether it is thought to be to the advantage of shareholders as a whole.
As an alternative to completing a hard copy proxy form, proxies may be appointed electronically in accordance with note 4 below.
and in each case the appointment of proxy must be received by the Company not less than 48 hours before the time of the AGM (excluding non-working days).
The deadline for receipt of proxy appointments (see note 4) also applies in relation to amended instructions. Where two or more valid separate appointments of proxy are received in respect of the same share in respect of the same meeting, the one which is last sent shall be treated as replacing and revoking the other or others.
This document is for information purposes only and does not constitute legal advice. Specific advice should be sought on your specific circumstances before taking any action (or deciding not to take any action) in reliance on the contents of this document.
Chairman and Chairman of the Nomination Committee
1 July 2016
Chairman of the Card Factory plc and Bourne Leisure Limited. Senior advisor to Charterhouse Private Equity
Chairman of the Nomination Committee
Founder
2 August 2005 (AO Retail Limited 19 April 2000)
John attends the Remuneration, Audit and Nomination Committees by invitation.
Chief Executive Officer
Steve attends the Remuneration, Audit and Nomination Committees by invitation.
Appointment to the Board 1 August 2015
Mark attends the Remuneration, Audit and Nomination Committees by invitation.
Senior Independent Director
Appointment to the Board 6 February 2014
Chairman of ASOS Plc and Wiggle Ltd
Committee membership Brian is Chair of the Remuneration Committee and a member of the Audit and Nomination Committees.
12 December 2005
Executive Director of Better Business Support Ltd and Clifton Trade Bathrooms Ltd
No
Committee membership Chris is a member of the Audit Committee.
Non-Executive Director Appointment to the Board 5 February 2014
Non-executive director of Skipton Group Holdings Ltd, and EI Group Plc
Marisa is the Chair of the Audit Committee and is a member of the Remuneration Committee.
Appointment to the Board
Non-executive director of Costain Group plc and Rightmove plc
Jacqueline is a member of the Nomination and Remuneration Committees.
At the close of business on 14 June 2018 (being the latest practicable date prior to the date of this document), the Concert Party Directors (together with persons acting in concert with them) had an interest in an aggregate of 161,479,834 ordinary shares representing 35.20% of the issued ordinary share capital of the Company.
At the close of business on 14 June 2018 (being the latest practicable date prior to the date of this document), the Concert Party Directors had been granted in aggregate: (a) options over 1,504,727 ordinary shares in the capital of the Company pursuant to the PSP (the "Existing PSP Options"); and (b) options over 40,448 ordinary shares in the capital of the Company pursuant to the Sharesave Scheme (the "Sharesave Options").
As further described in the Annual Report, it is intended that Steve Caunce will be granted a Plan award during 2018 with a value equivalent to 300% of his salary where no more than one third of the award which vests can be delivered in cash (and so at least two-thirds of the award that vests will usually be delivered in ordinary shares, either as conditional awards of ordinary shares or nil-cost options over ordinary shares). The exact number of ordinary shares which will be the subject of options or conditional awards pursuant to this award will not be known until the time the award vests, however it is not envisaged that such number of ordinary shares will exceed 900,000 (the "Proposed Plan Options").
Pursuant to the Takeover Code, it is necessary to provide an illustration of the Concert Party Directors' maximum potential interest in ordinary shares in the Company based on certain assumptions.
Assuming: (i) the Company repurchases from persons other than the Concert Party Directors or any persons acting in concert with them all the ordinary shares for which it is seeking authority pursuant to Resolution 18 (the "Buyback Authority") and all such ordinary shares are cancelled; and (ii) there are no other allotments of ordinary shares, the maximum potential shareholding of the Concert Party Directors and any person acting in concert with them would increase to 39.11% of the issued share capital of the Company.
Assuming: (i) full exercise by the Concert Party Directors of all of the Existing PSP Options and Sharesave Options; (ii) full vesting and (where applicable) exercise of the maximum number of Proposed Plan Options; (iii) all of the Existing PSP Options, Proposed Plan Options and Sharesave Options are satisfied with existing ordinary shares of the Company; (iv) there are no other allotments of ordinary shares; and (v) the Company does not make any market purchases of its own shares pursuant to the Buyback Authority, the maximum potential shareholding of the Concert Party Directors and any person acting in concert with them would increase to 35.73% of the issued share capital of the Company.
Assuming: (i) full exercise by the Concert Party Directors of all of the Existing PSP Options and Sharesave Options; (ii) full vesting and (where applicable) exercise of the maximum number of Proposed Plan Options; (iii) all of the Existing PSP Options, Proposed Plan Options and Sharesave Options are satisfied with existing ordinary shares of the Company; (iv) the Company repurchases from persons other than the Concert Party Directors or any persons acting in concert with them all of the ordinary shares for which it is seeking the Buyback Authority and all such ordinary shares are cancelled save for sufficient ordinary shares as are held in treasury for the purposes of satisfying such exercise; and (v) that there are no other allotments of ordinary shares, the maximum potential shareholding of the Concert Party Directors and any person acting in concert with them would increase to 39.70% of the issued share capital of the Company.
John Roberts co-founded the business of the Group in 2000. Having previously worked extensively in the kitchen appliance industry, he has been instrumental in using the internet as a platform to change the way in which kitchen appliances are sold in the United Kingdom. Since co-founding the Group, John has presided over the evolution of the business and led the management team as Chief Executive Officer until February 2017 and remains an executive Director.
Steve Caunce is a Director and the Chief Executive Officer of the Company, and held Chief Operating Officer and Chief Financial Officer positions from 2005 until 2017. Prior to joining the Company, Steve was Finance Director with Phones 4U Limited between 2001 and 2003 and held senior positions at Mytravel Plc and Preston North End Plc.
Steve Caunce's spouse is a shareholder (and owns 1.19% of the issued share capital) and Steve Caunce is presumed to be acting in concert with his spouse. Both John Roberts and Steve Caunce are also presumed to be acting in concert with, and are directors and (in the case of John Roberts) shareholders of, Crystalcraft Limited which owns 0.0014% of the issued share capital of the Company.
It is not the Directors' current intention to sell any of their shareholdings to the Company pursuant to any exercise of the Buyback Authority.
The Concert Party Directors have confirmed to the Company that they have no current intention to change the Company's current plans with respect to: (i) the future business of the Company; (ii) the continued employment of the employees and management of the Company or its subsidiaries, including any material change in conditions of employment; (iii) its strategic plans for the Company, or their likely repercussions on employment or the locations of the Company's places of business; (iv) employer contributions into the Company's pension scheme(s), the accrual of benefits for existing members, or the admission of new members; (v) the redeployment of the fixed assets of the Company; or (vi) maintenance of the Company's listing on the London Stock Exchange, in each case, as a result of the proposals set out in Resolutions 19 and 20.
The Directors take responsibility for the information contained in this document:
To the best of the knowledge and belief of the Directors (who have taken all reasonable care to ensure that this is the case), such information is in accordance with the facts and does not omit anything likely to affect the import of such information.
The Concert Party Directors take responsibility for the information in this document which relates to them and their intentions. To the best of the knowledge and belief of the Concert Party Directors (who have taken all reasonable care to ensure that this is the case), such information is in accordance with the facts and does not omit anything likely to affect the import of such information.
The Independent Directors take responsibility for the recommendation and associated opinion attributed to them in the letter from the Chairman on page 2 of this document. To the best of the knowledge and belief of the Independent Directors (who have taken all reasonable care to ensure that this is the case), such information is in accordance with the facts and does not omit anything likely to affect the import of such information.
The Company was incorporated and registered in England on 2 August 2005 with registered number 05525751. The registered office of the Company is AO Park, 5a The Parklands, Lostock, Bolton, BL6 4SD. The Company was admitted to listing on the premium listing segment of the Official List and to trading on the London Stock Exchange in March 2014.
For further information on the business of the Company, and on the Company's current trading and prospects, see the Strategic Report on pages 16 to 55 of the Annual Report, which is incorporated into this document by reference.
The names of the Directors and the positions they hold at the date of this document are set out on page 9 of this document. Further information relating to the Directors is included in the information regarding the Board of Directors in the Corporate Governance Statement on pages 64 and 65 of the Annual Report, which is incorporated into this document by reference. The business address of the Directors is AO Park, 5a The Parklands, Lostock, Bolton, BL6 4SD.
No agreement, arrangement or understanding (including any compensation arrangement), exists between the Concert Party Directors or any person acting in concert with them and any of the other Directors, recent directors, shareholders or recent shareholders of the Company, or any person interested in or recently interested in shares of the Company, or any other person, having any connection with or dependence upon the proposals set out in Resolutions 19 or 20 (except, in respect of Resolution 20, the PSP, the Plan and the Sharesave Scheme).
At the close of business on 14 June 2018 (being the latest practicable date prior to the date of this document), the interests of the Directors and persons connected with them, within the meaning of Part 22 of the Companies Act 2006, in the issued share capital of the Company were as set out below. Save as set out below, as at the close of business on 14 June 2018 (being the latest practicable date prior to the date of this document), there are no interests, right to subscribe and short positions in the Company held by Directors and persons connected with them:
| Ordinary | % of issued |
|---|---|
| share capital | |
| 0.03% | |
| 23.87% | |
| 51,975,815* | 11.33% |
| 27,701 | 0.01% |
| 52,628 | 0.01% |
| 22,956,306 | 5.00% |
| 52,628 | 0.01% |
| – | – |
| Shares 128,573 109,504,019* |
* Crystalcraft Limited is a person connected with both John Roberts and Steve Caunce, and holds 6,348 ordinary shares in the issued ordinary share capital of the Company. These 6,348 ordinary shares are included in the interests of John Roberts but not in the interests of Steve Caunce in the table above in order to avoid double counting.
| Interest in options over | ||||
|---|---|---|---|---|
| ordinary shares | Grant date | Exercise period | Option price | |
| John Roberts | ||||
| Sharesave Scheme | 20,224 | 25 January 2018 | 1 March 2021 to 30 August 2021 | 89 pence |
| PSP (2016 Scheme Award) | 502,232 | 21 July 2016 | 21 July 2019 to 21 July 2026 | Nil |
| Steve Caunce | ||||
| Sharesave Scheme | 20,224 | 25 January 2018 | 1 March 2021 to 30 August 2021 | 89 pence |
| PSP (2016 Scheme Award) | 435,268 | 21 July 2016 | 21 July 2019 to 21 July 2026 | Nil |
| PSP (2017 Scheme Award) | 567,227 | 21 July 2017 | 21 July 2020 to 21 July 2027 | Nil |
| Mark Higgins | ||||
| Sharesave Scheme | 20,224 | 25 January 2018 | 1 March 2021 to 30 August 2021 | 89 pence |
| PSP (2016 Scheme Award) | 669,643 | 21 July 2016 | 21 July 2019 to 21 July 2026 | Nil |
| PSP (2017 Scheme Award) | 857,143 | 21 July 2017 | 21 July 2020 to 21 July 2027 | Nil |
| Total | 3,092,185 |
The Concert Party Directors and persons acting in concert with them have dealt in ordinary shares during the 12 month period ended on 14 June 2018, being the latest practicable date prior to the date of this document, as follows (which excludes the cancellation/lapse of previous Sharesave Options):
| Number of | Price | |||
|---|---|---|---|---|
| Name | Date | Transaction | ordinary shares | |
| John Roberts | 29 March 2018 | Gift to charitable trust | (610,820) | Nil |
| Steve Caunce | 23 March 2018 | Gift to charitable trust | (650,000) | Nil |
| Steve Caunce | 23 March 2018 | Gift to Linda Caunce | 5,000,000 | Nil |
| Linda Caunce | 23 March 2018 | Gift to charitable trust | (180,000) | Nil |
10. Current Ratings
The Company has not been rated by any ratings agencies.
The Directors' current service agreements and letters of appointment will be available for inspection as set out in paragraph 17 below. Details of the Directors' service agreements, emoluments and other benefits are set out in the Directors' Remuneration Report on pages 77 to 90 of the Annual Report, which is incorporated into this document by reference. There are no other service contracts between the Directors and the Company or any of its subsidiaries and no other service contracts have been entered into nor have existing service contracts or letters of appointment been amended during the period of six months prior to the date of this document, save that all Non-Executive Directors agreed to an extension of the term of their appointments for one further year in February 2018.
Within the period of two years prior to the date of this document, no contracts have been entered into by the Company or any of its subsidiaries, other than in the ordinary course of business, which are or may be material.
Additionally, neither John Roberts nor Steve Caunce have entered into any contracts, other than in the ordinary course of business, within the period of two years prior to the date of this document which are or may be material to the proposal set out in Resolutions 19 and 20.
There has been no significant change in the financial or trading position of the Company since 31 March 2018, being the date to which the last audited published accounts of the Company were prepared.
The middle market quotations for the ordinary shares of the Company, as derived from the Daily Official List of the London Stock Exchange plc, at the close of business for the first business day (being any day, other than a Saturday or Sunday or public holiday, on which banks are generally open for business in London, United Kingdom, a "Business Day") of each of the six months immediately preceding the date of this document and at close of business on 14 June 2018 (being both the latest practicable and available date prior to the date of this document) were:
| Date | Price per ordinary share (p) |
|---|---|
| 14 June 2018 | 151.4 |
| 1 May 2018 | 154.0 |
| 3 April 2018 | 115.8 |
| 1 March 2018 | 137.2 |
| 1 February 2018 | 140.0 |
| 2 January 2018 | 107.6 |
| 1 December 2017 | 130.0 |
On 14 June 2018 (being the latest practicable date prior to the date of this document), and save as disclosed in paragraph 9 of this Appendix 2:
(c) there are no relevant securities which the Concert Party Directors or any person acting in concert with them has borrowed or lent (excluding any borrowed relevant securities which have either been on lent or sold);
(d) no:
has any interest in, right to subscribe in respect of or short position in relation to any relevant securities; and
(e) there are no relevant securities which the Company or any person acting in concert with the Directors or Company has borrowed or lent (excluding any borrowed relevant securities which have either been on lent or sold).
In this paragraph 15 reference to:
"relevant securities" means ordinary shares in the Company and securities carrying conversion or subscription rights into ordinary shares;
"derivatives" includes any financial product, whose value in whole or in part is determined directly or indirectly by reference to the price of an underlying security;
"short position" means a short position, whether conditional or absolute and whether in the money or otherwise, and includes any short position under a derivative, any agreement to sell or any delivery obligation or right to require another person to purchase or take delivery;
"associated company" means in relation to any company, that company's parent subsidiaries and fellow subsidiaries, and their associated companies, and companies of which such companies are associated companies. For these purposes, ownership or control of 20% or more of the equity share capital of a company is regarded as the test of associated company status;
(iii) in relation to a person who is an associated company of the Concert Party Directors or the Company, an organisation (if any) which is advising that person in relation to the Waiver Resolutions and the Buyback Authority;
"control" means an interest, or aggregate interests, in shares carrying in aggregate 30% or more of the voting rights of a company, irrespective of whether such interest or interests give de facto control; and
For the purposes of this paragraph 15 a person is treated as "interested" in securities if he or she has long economic exposure, whether absolute or conditional, to changes in the price of those securities (and a person who only has a short position in securities is not treated as interested in those securities). In particular, a person is treated as "interested" in securities if:
There is no agreement or arrangement or understanding by which the beneficial ownership of any ordinary shares acquired by the Company pursuant to the Buyback Authority will be transferred to any other person. Such shares will, in accordance with the Act, either be held in treasury up to the amounts permitted to be held in treasury by the Act, or be cancelled and the issued share capital of the Company reduced by the nominal amount of those ordinary shares so purchased.
Numis has given and has not withdrawn its written consent to the issue of this document with the inclusion of its name and the references to it in this document in the form and context in which they appear.
The following documents are available for inspection during normal business hours at the registered office of the Company on any Business Day from the date of this document until the date of the AGM and may also be inspected at the AGM venue for 15 minutes prior to and during the meeting:
With the exception of items (b) and (c) above, copies of these documents will also be available on the Company's website ao-world.com.
Copies of the following documents are available on the Company's website at ao-world.com, and a hard copy is available on request from the Company Secretary at AO Park, 5a The Parklands, Lostock, Bolton, BL6 4SD:
Additionally, the rules of the AO 2018 Incentive Plan will be available for inspection at the offices of Deloitte LLP (Company Secretarial Department), 2 New Street Square, London EC4A 3BZ on any weekday (Saturdays, Sundays and public holidays excluded) until the close of the Annual General Meeting, and will also be available at the place of the Annual General Meeting for at least 15 minutes before and during the meeting.
The table below sets out the various sections of those documents which are incorporated by reference into this document, so as to provide the information required pursuant to the Takeover Code. These documents will also be available at the Company's website, ao-world.com, from the date of this document and available for inspection as set out at paragraph 17 above.
| Document | Section | Page number in such document |
|---|---|---|
| 2018 Annual Report and | Strategic Report | 16 to 55 |
| Accounts | Corporate Governance | |
| Statement – Board of | ||
| Directors | 64 and 65 | |
| Directors' Remuneration | ||
| Report | 77 to 90 |
Any shareholder, person with information rights or other person to whom this document is sent may request a copy of each of the documents set out above in hard copy form. Hard copies will only be sent where valid requests are received from such persons. Requests for hard copies are to be submitted to the Company's Registrars, Link Asset Services, by calling 0871 664 0300. Calls to this number cost 12p per minute plus your phone company's access charge. If you are outside the United Kingdom, please call +44 371 664 0300. Calls outside the United Kingdom will be charged at the applicable international rate. Lines are open between 9.00 am and 5.30 pm, Monday to Friday excluding public holidays in England and Wales. Requests can also be made in writing to Link Asset Services, PXS, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU. All valid requests will be dealt with as soon as possible and hard copies mailed no later than two Business Days following such request.
The documents incorporated by reference into this document have been incorporated in compliance with Rule 24.15 of the Takeover Code.
At the 2018 AGM the Company is submitting a single incentive plan for shareholder approval – the AO 2018 Incentive Plan (the "Plan"). Under the Plan, part of the value a participant receives will be delivered in cash following the determination of the relevant performance conditions, with the remaining portion being deferred into an award of ordinary shares in the Company ("Shares").
The principal terms of the Plan are summarized below. The operation of the Plan will be supervised by the Remuneration Committee of the Board in respect of any Executive Director of the Company (an "Executive Director").
Whilst any employee of the Company or any of its subsidiaries is eligible to participate in the Plan (see "Eligibility" below), it is the Company's current intention that annual awards under the Plan will be primarily focussed on those of the Company's senior management who are capable of maximising value for shareholders.
All employees of the Company or any of its subsidiaries (including Executive Directors) are eligible for selection to participate at the discretion of the Board.
Employees who are selected to participate in the Plan will receive a right (a "Performance Award") to (a) an amount of cash (the "Cash Amount") and (b) a deferred award of Shares (the "Share Award"), subject to the rules of the Plan. The aggregate value of the Cash Amount and the total market value (as determined by the Board) of the Shares subject to the Share Award may not exceed a monetary value set by the Board at the time the Board grants the Performance Award (the "Award Amount"). For Performance Awards granted to Executive Directors, no more than one third of the Award Amount may be delivered as a Cash Amount.
The Board may not in respect of any financial year of the Company grant a Performance Award to an Executive Director with an Award Amount which will exceed 300 per cent. of the relevant participant's annual base salary.
Performance Awards will be subject to performance conditions set by the Board. Unless the Board determines a longer period will apply, the period over which the performance conditions are assessed (the "Performance Period") will be one financial year of the Company.
To the extent the performance conditions applicable to a Performance Award are met, the Cash Amount will be paid as soon as reasonably practicable after the Board's assessment of the performance conditions.
Share Awards will then be subject to additional performance "underpin" conditions measured over a period that will run from the end of the Performance Period, the length of which will be set by the Board at the time of grant of the Performance Award. For Share Awards made to Executive Directors, this period will be at least three years.
Share Awards will normally be made during the 42 days beginning on the day after the announcement of the Company's results for any period or when the Board determines that exceptional circumstances exist which justify the making of a Share Award at that time. If the Company is restricted in making Share Awards during these periods, it may make Share Awards in the period of 42 days from when those restrictions are lifted.
The Board may make Share Awards as conditional awards of Shares, nil-cost options over Shares or as rights to acquire a cash amount which relates to the value of a certain number of notional Shares. No payment is required for a Share Award.
Share Awards will normally vest as soon as reasonably practicable after the end of the relevant performance "underpin" period, or such later date that the Board determines, to the extent that the performance "underpin" conditions have been met.
Share Awards structured as nil-cost options will normally be exercisable from vesting, until the tenth anniversary of the date on which the Share Award is made.
Any performance or "underpin" conditions applying to awards may be amended or substituted by the Board if an event occurs that causes the Board to consider that the new conditions would be more appropriate and not materially less difficult to satisfy.
Except in certain circumstances set out below, any outstanding Performance Awards and unvested Share Awards will lapse immediately when a participant ceases to be employed by or to hold office with the Company's group (the "Group").
However, if a participant's cessation of office or employment is because of his ill-health, injury or disability or the sale of the participant's employing company or business out of the Group or in other circumstances at the discretion of the Board (except where the participant is summarily dismissed):
The extent to which Performance Awards may be satisfied and Share Awards may vest in these circumstances will be determined by the Board, taking into account the satisfaction of the relevant performance or "underpin" conditions measured over the period originally set for them.
Unless the Board decides otherwise, the Award Amount subject to any outstanding Performance Award will also be reduced to take into account the proportion of the Performance Period which has elapsed on the participant's cessation of office or employment.
However, the Board retains discretion to allow a Performance Award to be satisfied and a Share Award to vest as soon as reasonably practicable after the individual's cessation of office or employment. If the participant ceases to hold office or employment prior to the satisfaction of a Performance Award, the Board may also decide to satisfy the Performance Award entirely in cash, rather than delivering the participant a Share Award.
If a participant dies, unless the Board decides otherwise, his outstanding Performance Award will be satisfied and his Share Awards will vest as soon as reasonably practicable after the date of his death on the basis set out for other 'good leavers' above.
Share Awards structured as nil-cost options may normally be exercised to the extent vested for a period of 12 months (or such other period as the Board may determine) after vesting. Where nil-cost options have already vested on the date of cessation of office or employment, those nil-cost options may be exercised for a period of 12 months from the date of cessation, unless the participant is summarily dismissed, in which case his nil-cost options will lapse.
The Board may decide, at any time prior to the satisfaction of Performance Awards or the vesting of Share Awards, to impose further conditions on an award or reduce the Award Amount subject to a Performance Award or the number of Shares under Share Awards (including to nil) ("malus"). The circumstances in which the Board may consider operating malus are:
In order to invoke the malus provisions, the relevant circumstances must have taken place within the period beginning on the start of the relevant performance period relating to the Performance Award and ending on the fifth anniversary of the grant date of the Performance Award (the "Testing Period").
Similarly, in the circumstances listed above (provided that they occur during the Testing Period) the Board may recover value from the participant following the payment of the Cash Amount or the vesting of Share Awards ("clawback"). The clawback provisions may be implemented at any time prior to the fifth anniversary of the grant date of the Performance Award by the participant being required to return some or all of the cash or Shares delivered under his Performance or Share Award(s) to the Company or to make a cash payment in respect of those Shares and/or through a reduction in (i) the vesting of any subsisting Share Awards or (ii) the number of Shares under any vested but unexercised nil-cost option.
The Board will retain the discretion to calculate the amount subject to recovery, including whether or not to claw back gross or net of any tax or social security contributions applicable to the award.
The Board may decide to satisfy Shares Awards with a cash payment equal to any gain that a participant would have made had the relevant award been satisfied with Shares.
The Board may decide that participants will receive an amount (in cash and/or additional Shares) equal in value to any dividends that would have been paid on the Shares which vest under a Share Award on such terms and over such period (starting no earlier than the date on which the Share Award is made and ending no later than the date on which the Share Award vests) as the Board may determine. This amount may assume the reinvestment of dividends and exclude or include special dividends.
In the event of a change of control of the Company, Performance Awards will be satisfied and unvested Share Awards will vest early, taking into account the extent to which the relevant performance or "underpin" conditions applicable to the award have been met. In these circumstances, the Board may determine that any outstanding Performance Awards are satisfied entirely in cash, rather than making the participant a Share Award.
Unless the Board determines otherwise, the Award Amount subject to the Performance Award will also be reduced to take into account the proportion of the Performance Period which has elapsed.
Alternatively, the Board may permit awards to be exchanged for equivalent cash or share-based awards. If the change of control is an internal reorganisation of the Group or, if the Board so decides, participants may be required to exchange their awards.
If other corporate events occur such as a winding-up of the Company, demerger, delisting, special dividend or other event which, in the Board's opinion, may materially affect the current or future value of Shares and the Board determines it would not be appropriate or practical to adjust awards, the Board may determine that awards will vest on the same basis as for a change of control.
The Plan may operate over new issue Shares, treasury Shares or Shares purchased in the market. The rules of the Plan provide that, in any 10 year rolling period, not more than 10 per cent. of the Company's issued ordinary share capital may be issued under the Plan and under any other employee share plan adopted by the Company.
In addition, the rules of the Plan provide that, in any 10 year rolling period, not more than 5 per cent. of the Company's issued ordinary share capital may be issued under the Plan and any other discretionary employee share plan adopted by the Company. Shares transferred out of treasury under the Plan will count towards these limits for so long as this is required under institutional shareholder guidelines. Awards which lapse, are relinquished or are satisfied in cash, as well as any awards granted on or before the Company's admission to trading on the London Stock Exchange, will be disregarded for the purposes of these limits.
The Board may, at any time, amend the provisions of the Plan in any respect. The prior approval of the Company's shareholders will be obtained in the case of any amendment to the advantage of eligible employees or participants which is made to the provisions relating to eligibility, individual or overall limits, the basis for determining the entitlement to, and the terms of, awards, the adjustments that may be made in the event of any variation to the share capital of the Company and/or the rule relating to this prior approval. There are however exceptions from this requirement to obtain shareholder approval for any minor amendment to benefit the administration of the Plan, to take account of any change in legislation or to obtain or maintain favourable tax, exchange control or regulatory treatment for any participant or member of the Group.
Awards are not transferable other than to the participant's personal representatives in the event of his death.
If there is a variation of share capital of the Company or in the event of a demerger, delisting, special dividend or other event which, in the Board's opinion, may materially affect the current or future value of Shares, the Board may make such adjustments to the number of Shares subject to Share Awards, any performance condition applicable to Performance Awards and/or any "underpin" condition applicable to Share Awards as it considers appropriate.
Shares issued and/or transferred under the Plan will not confer any rights on any participant until the participant in question has received the underlying Shares. Any Shares allotted will rank equally with Shares then in issue (except for rights arising by reference to a record date prior to their issue).
The benefits received under the Plan are not pensionable.
No Performance Awards may be granted under the Plan more than ten years after the date the Company's shareholders approve the Plan.
The rules of the AO 2018 Incentive Plan will be available for inspection at the offices of Deloitte LLP (Company Secretarial Department), 2 New Street Square, London EC4A 3BZ on any weekday (Saturdays, Sundays and public holidays excluded) until the close of the Annual General Meeting, and will also be available at the place of the Annual General Meeting for at least 15 minutes before and during the meeting.
AO World Plc AO Park 5A The Parklands Lostock Bolton BL6 4SD
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