New Star will issue 35m new shares to key employees under its new performance-based share plan.
Unveiled this morning, the new share issue represents 15% of the firm’s current issued share capital and is aimed at aligning employee interests with shareholders and to lock in vital staff.
The company says it has identified 35 executives to whom it intends to issue up to 27m new shares, with approximately 3.5m shares awarded to five executive directors.
However, chairman John Duffield and chief executive Howard Covington feel they are “sufficiently incentivised” and will not participate.
The plan shares will be purchased at the market price by staff and the New Star Employee Benefit Trust, with the trust paying all but 1p of each share.
Provided all the shares are sold at 250p share, the new issue would dilute New Star’s earnings per share by a maximum of 4%.
Should performance targets be met, a participant will benefit by the growth in value of those shares minus 5% per annum carrying cost. The incentive scheme will run until the end of 2012.
New Star says the plan currently has 31.3% issued share capital approval.
In addition to the share plan, New Star has unveiled a cash bonus plan for all group employees, expected to cost between £5m and £10m.
“We believe it is important to ensure the interests of key employees are closely aligned with those of all shareholders and to make sure these employees are locked in,” Duffield says.
“We expect the new performance-based share plan will achieve both these objectives to the benefit of all parties.”
New Star shares are currently 2.43% ahead to 137p.IFAonline
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