It is issuing 35 million new shares, of which 27 million are already allocated to 35 leading executives including 3.5 million for five executive directors. Managers will have to meet performance targets to benefit.
The 35 million new shares will account for 15 per cent of the group’s share capital.
Chairman John Duffield and chief executive Howard Covington will not take part in the scheme, which replaces the current incentive plan which is due to expire after the announcement of New Star’s 2009 interim results.
New Star is also starting a cash bonus plan for its other staff at an estimated cost of between 5m and 10m a year. Chairman John Duffield said: “We believe it is important to ensure that the interests of key employees are linked closely with the shareholders and to make sure these employees are locked in.
“We expect that the new performance-based share plan will achieve both these objectives to the benefit of all parties.”