Stock Appreciation Rights (SARs)
Stock appreciation rights (SARs) are a type of financial instrument that provides employees with a cash payment based on the appreciation of the company's stock. SARs are a type of synthetic equity, which means that they mimic the economic characteristics of equity ownership, but do not involve the actual transfer of ownership of the company's stock to the employees.
SARs are granted to employees by the company, and they give the employees the right to receive a cash payment based on the difference between the grant price and the market price of the company's stock at a specified future date. The grant price is typically set at the time the SARs are granted.
SARs can provide employees with some of the same benefits of equity ownership, such as the potential for appreciation and the alignment of interests with the company. However, unlike actual equity, SARs do not involve the transfer of ownership of the company's stock, and they do not provide employees with voting rights or other rights associated with equity ownership.
SARs can be an attractive option for companies that want to provide employees with the potential for financial gain based on the company's stock performance, without the need for the company to issue actual equity.
SARs are granted to employees by the company, and they give the employees the right to receive a cash payment based on the difference between the grant price and the market price of the company's stock at a specified future date. The grant price is typically set at the time the SARs are granted.
SARs can provide employees with some of the same benefits of equity ownership, such as the potential for appreciation and the alignment of interests with the company. However, unlike actual equity, SARs do not involve the transfer of ownership of the company's stock, and they do not provide employees with voting rights or other rights associated with equity ownership.
SARs can be an attractive option for companies that want to provide employees with the potential for financial gain based on the company's stock performance, without the need for the company to issue actual equity.