John Roberts, AO’s founder and chief executive, added that he will donate any bonus he receives from the scheme to disadvantaged young people in the UK.
Shares in the electrical goods retailer currently trade at 172p and the company said to hit the trigger would require the price to rise by 30% a year from here to 523p over the next 5-7 years.
At that point, AO World said it will have a market cap of £2.5bn and 10% of the rise in value from the current £787mln will be paid to staff.
"The AO VCP rewards exceptional performance and value creation and we will achieve it through our passion to serve customers brilliantly with a long-term lens,” said Roberts.
“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.”
Bonus schemes have long been a contentious issue with most recently the two founders of online fashion retailer boohoo (LON:BOO) authorising a scheme that pays them £150mln if its share price rises by two-thirds.