Stock Appreciation Right - SAR

DEFINITION of 'Stock Appreciation Right - SAR'

A right, usually granted to an employee, to receive a bonus equal to the appreciation in the company's stock over a specified period. Like employee stock options, SARs benefit the holder with an increase in stock price; the difference is that the employee is not required to pay the exercise price (as with an employee stock option), but rather just receives the amount of the increase in cash or stock.

BREAKING DOWN 'Stock Appreciation Right - SAR'

For example, say an employee is given 100 SARs. Good fortune shines and the stock increases $50 per share over three years. As a result, the employee gets $5,000 (100 SARs x $50 = $5,000). The main benefit with SARs is that the employee does not have to purchase anything to receive the proceeds.

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