The differrence between stock appreciation rights (sar) & profit sharing
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Overview of stock appreciation rights (sar) & profit sharing
There are quite a few differences and similarities between stock appreciation rights (sar) and profit sharing. To help you make a choice, we've listed the most important points below.
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What does it mean?
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.
PARs are similar to SARs, but instead of the increase in value of a share, the employee receives a cash amount linked to the company's profit.
How does it work financially for employees?
With an SAR, the employee receives a cash amount equal to the increase in the company's value.
Employees receive a cash amount linked to the company's profit.
What about employee engagement?
Employees do not have a say in the company, so employee involvement is somewhat lower than with shares or share certificates.
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 profit made by an employee is taxed as income.
The profit made by an employee is taxed as income.
What are the costs?
This is just a contract.
This is just a contract.
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