The differrence between shares & stock appreciation rights (sar)
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Overview of shares & stock appreciation rights (sar)
There are quite a few differences and similarities between shares 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?
Shares are ownership rights in a company. The owner of shares participates in the profit the company makes.
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?
Shares allow employees to directly benefit from the increase in the company's value.
With an SAR, the employee receives a cash amount equal to the increase in the company's value.
What about employee engagement?
Shares create the highest form of engagement, as employees are involved in the decision-making process through 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?
If the employee buys <5% of the shares, they pay no tax on purchase or sale. However, the employee does pay box 3 tax. If the employee buys >5% of the shares, the shares are taxed in box 2.
The profit made by an employee is taxed as income.
What are the costs?
In addition to the share plan, shareholders' agreements must be signed, and everything must be recorded through a notary.
This is just a contract.
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