The differrence between options & stock appreciation rights (sar)
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Overview of options & stock appreciation rights (sar)
There are quite a few differences and similarities between options and stock appreciation rights (sar). To help you make a choice, we've listed the most important points below.
Compare the different plans below
What does it mean?
Options give the right to buy shares in the future.
SARs is a contract between an employer and employee. An SAR gives an employee the right to the increase in value of a share. Unlike an option, an SAR does not give the right to buy a share.
How does it work financially for employees?
Stock options allow employees to benefit from an increase in the company's value.
Also, employees only invest when they exercise the options, so they do not lose their investment in case of a decrease in value.
Also, employees only invest when they exercise the options, so they do not lose their investment in case of a decrease in value.
With an SAR, the employee receives a cash amount equal to the increase in the company's value.
What about employee engagement?
Employees receive shares only when they exercise the options. Only then do they get voting rights.
Employees do not have a say in the company, so employee involvement is somewhat lower than with shares or share certificates.
What about tax implications for the employee?
The difference between the exercise price and the purchase price of the option is taxed as income.
The profit made by an employee is taxed as income.
What are the costs?
This is just a contract. The shares only need to be notarized when exercised.
This is just a contract.
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