Stock Appreciation Right - SAR
A right, usually granted to an employee, to receive a bonus equal to the appreciation in the company's stock over a specified period. Like employee stock options, SARs benefit the holder with an increase in stock price the difference is that the employee is not required to pay the exercise price (as with an employee stock option), but rather just receives the amount of the increase in cash or stock.
Investopedia Commentary
For example, say an employee is given 100 SARs. Good fortune shines and the stock increases $50 per share over three years. As a result, the employee gets $5,000 (100 SARs x $50 = $5,000). The main benefit with SARs is that the employee does not have to purchase anything to receive the proceeds.
Related Links
Option Compensation - Part One
Option Compensation - Part Two
Accounting and Valuing ESOs
See also: Employee Stock Option, Employee Stock Ownership Plan, Incentive Stock Option, Nonqualified Stock Option
Also spelled: SARsSAR
stock appreciation right