There are not many companies whose bonus arrangements warrant an 1,800 word announcement to the London Stock Exchange - but then there are not many companies like New Star Asset Management, the fund manager founded by John Duffield.

A critical component of the company’s strategy on flotation three years ago was the way in which Mr Duffield tied in staff using shares. They were awarded nearly 60 per cent of the equity on condition that they could not leave with their stock, and could only sell small amounts at set times. But with the handcuffs finally due to come off next year, New Star has had to replace those arrangements.

Today it said it will issue 35 million new shares - around 15 per cent of its current equity - to key employees between 2009 and 2012. New Star said external investors speaking for 31 per cent of its stock have indicated their support for the plan. Separate cash bonuses are expected to cost the company around £10 million a year.

The difficulty in appraising the merit of the share-based scheme is that it is almost impossible to quantify its impact. If all of the shares vest at the upper threshold - 450p, against today’s 137p - then the dilutive impact is 9 per cent. Alternatively, if the shares only reach 250p, that dilution may only be 2 per cent.

Of course, for shareholders who have seen New Star’s shares surge from 225p at float to 485p last year, only to touch 83p in March, dilution is a small price to pay for trebling their money from current levels.

For most others, it is hard not to feel that fund managers are better to work for than to own.

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