How does a stock appreciation right differ from a stock option?
A. A SAR is very similar to a stock option, but with a key difference. When a stock option is exercised, an employee has to pay the grant price and acquire the underlying security. However, when a SAR is exercised, the employee does not have to pay to acquire the underlying security. Instead, the employee would receive the appreciation value of the underlying security, which would equal the current market value less the grant price.
