Stock Appreciation Rights Sars

Contractual rights to a stipulated percentage of the increase in the value of an insurance agency over a given future period of time. They are used to convey a percentage of the increase in the agency's value to a key employee without resulting in the owner (s) of the agency owning less than 50%. The advantages of such a stock transfer for the agency owner include the following:

1. Noncompete agreements not further reinforced since the key employee does not receive benefits if an agreement is violated.
2. The key employee is tied to the agency because that employee can become an equity owner without actually committing his or herown funds.