STOCK APPRECIATION RIGHTS (SARs)
01.Core Concepts
• Rights that grant the holder cash in an amount equal to the excess of the fair market value of the stock over the exercise price • Ties an employee benefit to the value of the employer’s stock • Essentially a cashless exercise without any right to purchase the stock • No taxation at grant • Unless employee elects IRC Section 83(b) • Employee – W-2 income for excess value over exercise price • Employer – Tax deduction for W-2 amount