SARs: Basics

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What You Need To Know About Stock Appreciation Rights (SARs): Part 1

Bruce Brumberg
Stock appreciation rights, referred to as SARs, will soon start showing up in equity grants at many companies. To help you understand SARs, Part 1 explains the "appreciation," the role of exercises, and taxes at exercise.

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FAQs (Jump to articles)

Does all the stock option content on this website also apply to stock appreciation rights (SARs)?

Much of the stock option content is relevant to SARs. All the key stock option features...

UPDATED! What do examples and surveys show about the effects mandatory expensing is having on my stock grants?

Surveys show that rank-and-file employees and executives are likely to receive fewer stock options, or that grants will be made only at higher levels. In addition, the types of equity grants at companies have changed. A summary of data in surveys from 10 major consulting and research firms shows that...

Why are many companies considering stock appreciation rights (SARs) as an alternative to stock options?

FAS 123(R) requires the expensing of stock options. This makes accounting for stock options and stock-settled SARs similar, leading some companies...

What are stock appreciation rights (SARs), and how are SARs taxed?

SARs, or "stock appreciation rights," are rights your company grants you to receive the value of appreciation in shares of its stock from the...

Are stock appreciation rights (SARs) a better deal for me than stock options?

The personal economic benefits of SARs are...

How do stock appreciation rights (SARs) differ from stock options, restricted stock, and RSUs?

Stock appreciation rights entitle you to stock (or sometimes cash) that equals the amount...

How do I exercise stock appreciation rights?

Unlike with stock options, you have no exercise cost to obtain the appreciation spread above...

How does a stock split affect my stock appreciation rights?

Most stock plans automatically adjust your SARs for the stock split. Your number of SARs will be adjusted...

What specific provisions should I know about my SARs grant?

As with stock options, you should know the following, all of which will be available in your...

Am I entitled to voting rights or any stock dividends paid to shareholders before I exercise?

No. Until you exercise a stock option, you do not have the rights of a...

Are there any special securities law issues and filing requirements with stock appreciation rights (SARs) for senior executives and directors?

For senior executives, stock-settled SARs avoid the concerns about cashless exercises by officers and directors raised by...

How does a court determine whether my soon-to-be-former spouse should receive any part of my stock grant?

First a court must decide (under the relevant state's laws) whether the property subject to division includes...

What is a "phantom stock plan"?

A phantom stock plan is similar to stock appreciation rights (SARs) in that the recipient receives...

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SARs

Basics

Taxes

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Tax errors can be costly! Don't draw unwanted attention from the IRS. Our Tax Center explains and illustrates the tax rules for sales of company stock, W-2s, withholding, estimated taxes, AMT, and more.

NEW! What are the biggest mistakes related to stock appreciation rights (SARs) that I can make on my tax return, and how can I avoid them?

It is easy to make mistakes that lead to paying more tax than you need to, or that may even prompt a review by the IRS. Some of the mishaps are...

NEW! I acquired stock from exercises and restricted stock vesting a few years ago. When I sell the stock, how do I rediscover the cost basis for Schedule D of my tax return?

Let's first review the tax rules and the W-2 reporting. The tax basis for...

If I exercise stock appreciation rights (SARs), will I need to make estimated tax payments?

At a minimum, at the time of your SARs exercise your company will withhold taxes from the proceeds at the required federal withholding rate for supplemental income. However, depending on your income, this minimum withholding may not be enough. If so, you will need to...

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