BAR Equity Compensation · Updated November 2026
SAR or Stock Option: What Does the Employee Receive?
Both awards can benefit from rising stock prices, but the employee's legal and economic rights differ.
Stock option
The employee receives the right to acquire shares at a specified exercise price.
Stock appreciation right
A SAR generally provides the appreciation in stock value over a specified base amount and can be settled in cash, shares, or another permitted form.
Classification
Settlement terms can affect whether the award is equity-classified or liability-classified.
Remeasurement
Liability-classified awards can require subsequent fair-value remeasurement, changing compensation expense over time.
The takeaway
Options give the right to buy shares. SARs give the value of appreciation without necessarily requiring a share purchase.
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FAQ
Does a SAR always require buying stock?
No.
Can a cash-settled award create liability accounting?
Yes.
Can liability-classified compensation expense change over time?
Yes.