Ownership Thinking: How to End Entitlement and Create a Culture of Accountability, Purpose, and Profit

Stock Appreciation Rights

Stock Appreciation Rights (SARs) are a form of synthetic equity (in other words, not actual stock) that provides the grantee with the appreciation, if any, in the value of the underlying stock from the date of grant to the date of exercise. I am including a section on SARs in this book, and specifically in this chapter, for three reasons:

First, SARs are simply another form of cash incentive and so do not necessarily belong in a discussion of stock plans. The most significant difference between a SARs plan and an incentive plan tied to PBT (as discussed in this chapter) is that SARs are tied to the stock value of the organization.

Second, SARs (and other forms of synthetic equity, such as Phantom Stock plans) offer an ...