AJ Bell to donate £10 million to charity via innovative CSR initiative

The initiative forms part of AJ Bell’s Corporate Social Responsibility (CSR) strategy with the share options being granted in favour of the AJ Bell Trust, a registered charity set up by Andy Bell, chief executive of AJ Bell, predominantly to support disadvantaged young people in the UK. AJ Bell customers and staff will be given the opportunity to nominate which underlying causes should benefit.

If the performance targets are not met in part or in full, Andy Bell has committed to make up any shortfall with a personal donation ensuring that at least £10 million is donated to charity.

Andy Bell, chief executive of AJ Bell, comments:

“If we exceed our ambitious growth plans, our shareholders will benefit and we want to ensure some of that success is shared with the less fortunate in society. Here we have an example of capitalism and socialism working hand in hand as a combined force for good.

“This CSR initiative aligns the interests of our staff, our customers, our shareholders and our community. Many of our customers and staff are passionate about supporting charitable causes and we believe this is a win-win for all involved.”

About the AJ Bell Trust

The AJ Bell Trust is a registered charity (number 1141269) which predominantly helps disadvantaged young people. It is funded mainly by annual donations from AJ Bell and personal donations from Andy Bell.

Investment manager Paul Clements and solicitor Paul Barrow have recently been appointed as independent trustees of the AJ Bell Trust, joining existing trustees Andy and Tracey Bell.

How the share option plan will work

AJ Bell plc will grant market value share options in favour of the AJ Bell Trust, which will only be exercisable if certain stretch performance conditions are satisfied.

Options structure

The structure of the plan will be as follows:

a) The intention is for the options to be granted at the average closing price between 5 and 11 December 2019 over shares having an aggregate value of £10 million (e.g if the price is £4, then over a maximum of 2.5 million shares).

b) The £10 million donation figure is based on an assumption that the average value of the shares at the time of exercise will be, on average, double the exercise price.

c) The options will be exercisable in three equal tranches to avoid any cliff edge issues and to ensure there is a focus on increasing shareholder value over the longer term.

d) The exercise of each tranche of the options will be conditional upon the diluted earnings per share (EPS) for the financial years ending on 30 September 2022, 2023 and 2024 respectively, having increased in relation to the 7.47 pence EPS for the year which ended on 30 September 2019, by more than:

• 90% for 30 September 2022;
• 115% for 30 September 2023; and
• 140% for 30 September 2024.

e) If the minimum threshold is met for any of those years, then for each full 1 percentage point by which the target is exceeded, the option will be exercisable in respect of 10% of the relevant tranche of shares. So, for example, if the minimum threshold for 2022 is exceeded by 6 percentage points, such that the increase in the EPS is equal to or greater than 96%, but less than 97%, the option will be exercisable in respect of 60% of the relevant tranche (i.e. 500,000 shares, based on a tranche of 833,333 shares) and would lapse in respect of the remaining 40% (i.e. 333,333 shares). Conversely, if the percentage growth in the EPS for 2022 is less than 91%, no award will be made and all share options for that tranche will lapse.

f) The AJ Bell board of directors will reserve a discretionary right to reduce the number of options which vest as a consequence of the formulaic outcome if (i) the chair of the AJ Bell Risk and Compliance Committee considers excessive risk to have been taken in order to meet the relevant target EPS or if the board considers there to have been a material degradation in the quality of earnings in meeting the relevant target.

The proposed grant as described in this announcement is subject to formal approval by the Board of AJ Bell plc and a further announcement will be made in due course when such approval is given. In addition, as the AJ Bell Trust is a member of the Company’s Concert Party, further approval for this proposed grant will be sought at the Company’s AGM in early 2020.

These articles are for information purposes only and are not a personal recommendation or advice.