Stock Appreciation Rights Plans
SARS Plan For Employees
Stock Appreciation Rights (SARs plans) entitle employees to a payment in cash or shares equal to the appreciation in the company’s stock over a specified period of time. Similar to employee stock option plans or ESOPs, SARs plans for employees increase in value when the company’s stock price rises. However, unlike employee stock ownership plans (ESOPs), employees are not required to pay the exercise price, and can opt to only receive the amount of any increase in stock price, deliverables in cash or company stock upon exercising, depending on the guidelines of the SARs plan.
Our team of sars advisors, sars consultants and sars lawyers help companies establish a Stock Appreciation Rights plan helping determine monetary awards and assistance.
What are Stock Appreciation Rights SARs?
A sars plan gives participants or employees the right to receive cash for shares of company stock in the amount equal to the appreciation on a specified number of shares over a designated time. A stock-settled SAR (SSAR) pays out appreciation using company stock. The employee participants then have the option of keeping the stock or selling the stock for cash. A cash-settled SAR (CSAR) pays out the appreciation in the form of cash.
Our advisors, consultants and lawyers help companies reward employees with cash proceeds from an Stock Appreciation Rights Plan
The goal of establishing a SARs plan is to help employees acquire cash, rather than shares of stock. The SARs program involve two critical phases: First, the company acquires the shares of stock. Next, shares of stock are typically withheld or sold to cover taxes and applicable fees which then leaves the net share amount. The net shares are sold and participating employees receive cash proceeds for the sale of stock.
Net Exercise also plays a critical role. Net Exercise; determines the number of shares that must be sold or withheld to cover tax obligations and applicable fees. Most employees sell their stock shares for cash proceeds which essentially results in a huge cash bonus for employees.
For more information on Stock Appreciation Rights Plans or Employee SARs Plans contact us.