Stock or Share Appreciation Rights (SARs)


Produced in partnership with Renu Birla
Practice notes

Stock or Share Appreciation Rights (SARs)


Produced in partnership with Renu Birla

Practice notes
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Stock appreciation rights are a common vehicle utilised in the US to offer employees an opportunity to earn an amount equivalent to the appreciation of the company stock price over a pre-specified time period. In the UK, they are typically known as share appreciation rights (SARs).

Listed and unlisted companies can grant SARs.

In practical terms, a SAR is a form of unapproved (non-tax advantaged) share award, and its structure can be very flexible. In summary, a SAR is:

  1. •

    granted over a specified number of Shares, and

  2. •

    has a base value or Exercise price, normally set at the market value of the shares at grant

SARs can be satisfied using either cash or shares. For a discussion of the differences between a SAR and a phantom option, see Q&A: What is the difference between a phantom option and a SAR?

How a SAR works

SARs have the same economic effect for the participant as an unapproved share option when exercised, save that:

  1. •

    the employee does not have to pay an exercise price, therefore the

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Jurisdiction(s):
United Kingdom
Related legal acts:
Key definition:
Shares definition
What does Shares mean?

The CA 2006 merely provides that a share is a share in the company's share capital. A company's share capital comprises the number of shares issued by it to investors either on or after incorporation. Those investors then become the shareholders in the company. A shareholder’s shares are their personal property. By contrast, the assets of a company are owned by the company itself. Owning shares does not entitle a shareholder to any property rights in the company's assets.

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