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New Star announces new lock-in plan

New Star has proposed a new share-based plan that will keep the core of its senior management, fund managers and sales team at the firm until the end of 2012.

The share plans see the issue of 35 million new shares with 27 million already allocated for 35 of the group’s leading executive within the firm.

Of the 27 million, 3.5 million has been forwarded to five of the company’s executive directors. The eight million yet to be allocated is expected to be given to other staff as well as for new talent to join the firm.

Chairman John Duffield and chief executive Howard Covington will not take part in the new scheme, which replaces the current incentive plan which is due to expire after at the announcement of New Star’s 2009 interim results.

New Star says that the estimated cost of the cash bonus plan will be between £5m and £10m a year, based on current market conditions and market remuneration tables.

Performance for mutual fund managers will be set on annual peer group performance and assets under management with institutional fund management based on annual performance to their relative benchmark.

Property and hedge fund managers will have their performance related to assets under management.

The 35 million new shares will account for 15 per cent of the group’s shares capital. New Star said that it expects the maximum dilution to shares will be 4 per cent if all the plan shares vest at £2.50 and at 8.9 per cent if they are sold at £4.50 per share.

New Star chairman John Duffield said: “We believe it is important to ensure the interest of key employees are closely linked with all the shareholders and to make sure these employees are locked in. We expect the new performance-based share plan will achieve both these objectives to the benefit of all parties.”

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