Can a SAR Agreement be signed electronically?

Yes. Electronic signatures on SAR Agreements are generally enforceable under the ESIGN Act (15 U.S.C. §7001) and UETA where adopted, provided intent and attribution are documented and no statutory exception applies.

What tax event triggers on SAR exercise?

Taxation typically occurs at settlement when appreciation is realized; ordinary income is reported to the participant and withholding obligations apply, with subsequent capital treatment on disposition of any shares received.

Is board approval required for SAR grants?

Most companies require board or authorized committee approval to validly grant SARs; absent proper corporate action, grants may be challenged as invalid or ultra vires.

How should settlement be documented?

Document settlement mechanics in the agreement and preserve records of calculations, stock ledger updates, tax withholdings, and transfer agent instructions to ensure auditability and regulatory compliance.

What if a participant’s name differs from records?

Name mismatches can delay processing and tax reporting; verify legal names against government ID and update corporate records before settlement to avoid withholding or reporting errors.

What retention period applies to SAR Agreements?

Retain executed agreements for the award term plus at least three years to meet IRS recordkeeping norms (IRC §6501(a)); industry rules like HIPAA or SEC may impose longer retention periods.

Electronic Signature
Templates
Legal
Stock Appreciation Rights Agreement

Stock Appreciation Rights Agreement

This template is fully customizable. Edit the text, fill out the fields, and send it for signature. Give it a try!

STOCK APPRECIATION RIGHTS AGREEMENT

This Stock Appreciation Rights Agreement (the Agreement) is made as of Effective Date: by and between Company Name: , a corporation organized under the laws of , with principal place of business at (Company), and Participant Name: (Participant).

RECITALS

WHEREAS, the Company has adopted an equity incentive plan pursuant to which stock appreciation rights may be granted (the Plan) and the Board of Directors (or Compensation Committee) has authorized grants under the Plan; and

WHEREAS, the Company desires to grant to the Participant, and the Participant desires to accept, an award of Stock Appreciation Rights (SARs) subject to the terms and conditions set forth in the Plan and this Agreement.

WHEREAS, this Agreement sets forth the terms governing the grant, vesting, exercise, settlement and administration of the SARs.

NOW, THEREFORE

In consideration of the mutual covenants and agreements herein contained, the parties hereby agree as follows:

1. GRANT

1.1 Grant. Subject to the terms of the Plan and this Agreement, the Company hereby grants to Participant number of SARs equal to (SARs). Each SAR represents the right to receive an amount equal to the excess, if any, of the Fair Market Value of a share of the Company's common stock on the Exercise Date over the Base Price specified below.

1.2 Base Price. The Base Price per SAR shall be (Base Price), which is not less than the Fair Market Value of one share of the Company's common stock on the Grant Date of .

2. DEFINITIONS

For purposes of this Agreement, the following terms shall have the meanings set forth below:

(a) "Exercise" or "Exercise Date" means the date on which Participant elects to realize the Appreciation Amount with respect to vested SARs in accordance with Section 4.

(b) "Appreciation Amount" means the amount equal to (i) the Fair Market Value per share of Company common stock on the Exercise Date minus (ii) the Base Price, multiplied by the number of SARs being exercised.

3. VESTING

3.1 Vesting Commencement Date. Vesting of the SARs shall commence on (Vesting Commencement Date).

3.2 Vesting Schedule. Subject to Participant's continued Service with the Company through each applicable vesting date, the SARs shall vest as follows:

Vesting Schedule (describe schedule)

3.3 Acceleration. Vesting acceleration upon a Change in Control, death, disability or other events, if any, shall be governed by the terms set forth herein and the Plan. Any acceleration is subject to the committee's written determination and compliance with applicable law.

4. EXERCISE AND SETTLEMENT

4.1 Exercise Procedure. To exercise vested SARs, Participant must deliver to the Company a written election to exercise specifying the number of SARs to be exercised and the proposed Exercise Date, in the form prescribed by the Company.

4.2 Settlement. Upon exercise of SARs, the Company shall satisfy the Appreciation Amount as follows (select one or both, if permitted by the Plan):

Cash settlement in an amount equal to the Appreciation Amount.
Settlement in Company common stock having an aggregate Fair Market Value equal to the Appreciation Amount, calculated on the Exercise Date.

4.3 Timing. Unless otherwise provided in the Plan, payment or delivery to Participant shall be made within a reasonable period following the Exercise Date but in no event later than the last day permitted by applicable law.

5. TERMINATION OF SERVICE

5.1 Termination. If Participant's Service terminates for any reason, vested and unexercised SARs shall be exercisable only to the extent and for the period set forth in the Plan and any committee determination. Unvested SARs shall be forfeited upon termination except as otherwise provided by the Plan or a written agreement.

5.2 Effect of Termination Without Cause or for Good Reason. Any special post-termination rights (if applicable) must be set forth in an attached agreement or in the Plan and are effective only if expressly described herein:

6. TAX WITHHOLDING

The Company shall have the right to deduct or withhold from any payment to Participant all applicable federal, state, local and foreign taxes required by law, or require Participant to make a cash payment or satisfy such withholding obligations through delivery of previously owned shares or other means acceptable to the Company. Participant acknowledges that the Company may delay issuance of shares until tax withholding obligations are satisfied.

7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION

In the event of any stock split, reverse split, combination, consolidation, recapitalization, reorganization, merger, spin-off, extraordinary dividend or similar event affecting the Company's capital structure, the number and kind of SARs and the Base Price shall be equitably adjusted in accordance with the Plan to prevent dilution or enlargement of rights.

8. ASSIGNABILITY

SARs are personal to Participant and may not be assigned, alienated, pledged, hypothecated or transferred except to the extent permitted by the Plan and applicable law. Any attempted transfer in violation of this Section shall be void and of no force or effect.

9. COMPLIANCE WITH LAW; SECURITIES LAW

The Company shall not be required to issue or deliver any shares or payments pursuant to an exercise of SARs unless the issuance and delivery comply with all applicable requirements of securities laws and other applicable laws, rules and regulations. Participant agrees to comply with any reasonable rules or policies the Company adopts regarding the issuance or transfer of shares.

10. NOTICES

All notices required or permitted under this Agreement shall be in writing and shall be delivered to the addresses below (or to such other address as either party may specify in writing).

Company Notice Address Participant Notice Address

11. AMENDMENT AND WAIVER

This Agreement may be amended or modified only by a written instrument signed by both parties. No failure or delay by either party in exercising any right under this Agreement shall operate as a waiver of that right unless such waiver is in a writing signed by the waiving party.

12. GOVERNING LAW

This Agreement shall be governed by and construed in accordance with the laws of the State of , without regard to its conflicts of law principles.

13. ENTIRE AGREEMENT

This Agreement, together with the Plan and any written award notice or other document specifically referenced herein, constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, whether written or oral, relating to the subject matter of this Agreement.

14. SEVERABILITY

If any provision of this Agreement is held to be invalid, illegal or unenforceable under applicable law, such provision shall be stricken and the remaining provisions shall remain in full force and effect and shall be interpreted so as to give effect to the parties' intent.

15. COUNTERPARTS

This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Signatures exchanged by facsimile or electronic transmission shall be deemed originals.

16. ADDITIONAL ACKNOWLEDGEMENTS

Participant acknowledges receipt of a copy of the Plan, understands that the grant is subject to the terms of the Plan, and agrees to be bound by any rules and regulations adopted by the Company relating to awards under the Plan.

Company:

By:

Date:

Participant:

By:

Date:

What a Stock Appreciation Rights Agreement Is

A Stock Appreciation Rights Agreement (SAR Agreement) is a legal contract granting a participant the right to receive compensation equal to the increase in the company’s stock value over a specified period. SARs may be settled in cash, shares, or a combination, and define vesting, exercise rights, tax treatment, and forfeiture conditions for equity awards.

Why a Clear SAR Agreement Matters for Employers and Recipients

A clear SAR Agreement reduces disputes, clarifies tax obligations, and preserves corporate governance. Electronic execution is valid under the ESIGN Act (15 U.S.C. §7001) and UETA where adopted, subject to statutory exceptions and any required consumer disclosures.

Who Typically Prepares and Signs SAR Agreements

Both grantor and grantee should review the agreement carefully and retain executed copies for tax and corporate records.

Startups and founders using SARs to reward early employees with equity-linked upside.
Public companies managing SARs through equity administration teams and transfer agents.
Outside advisors and counsel reviewing SAR language for compliance and tax impact.

Core Elements to Include in a Professional SAR Agreement

A well-drafted agreement states the rights, settlement mechanics, and administrative rules that govern exercise, vesting, and post-termination treatment.

Grant Date

Specifies the exact date the SAR is granted and may determine vesting commencement and valuation reference points for tax purposes.

Reference Price

Defines the base price or fair market value against which appreciation is measured; essential for calculating payable amounts on exercise.

Vesting Schedule

Sets the timeline and conditions under which rights become exercisable, including cliff provisions, graded vesting, and acceleration triggers.

Settlement Mechanics

Explains whether settlement is cash, stock, or mixed, how shares are delivered, and any cash netting or tax withholding procedures.

Forfeiture Terms

Specifies circumstances (termination for cause, breach, resignation) that cause forfeiture or repurchase of unvested SARs.

Tax Withholding

Describes the employer’s withholding rights and reporting obligations at exercise or settlement, and any elections the participant may make.

Essential Data Elements to Record

Grantor: Issuer entity name

Grantee: Participant legal name

Shares Subject: Number of SARs

Grant Date: MM/DD/YYYY

Valuation Method: Reference price basis

Governing Law: State law chosen

Step-by-Step: Completing a SAR Agreement

Follow these sequential steps to prepare, approve, sign, and retain a legally valid SAR Agreement.

01

Prepare Document: Draft agreement with all terms and exhibits.
02

Populate Fields: Complete names, dates, quantities, and prices.
03

Obtain Approvals: Board or delegate approval recorded.
04

Execute and Store: Collect signatures and save final copy.

How to Configure an Online SAR Agreement Workflow

Set up an eSignature workflow that enforces approvals, captures audit data, and applies conditional fields for settlements.

Field	Configuration
Authentication	Email link, SMS code, or stronger MFA
Approval Routing	Sequential board -> HR -> participant
Conditional Fields	Show settlement options after vesting confirmation
Audit Trail	Capture IP, timestamp, and signer actions

Typical Submission and Record Routing

After execution, route executed SAR Agreements to the appropriate corporate and participant records for compliance and tax reporting.

To Participant: Email final signed agreement to grantee
To HR: Add copy to personnel file
To Equity Admin: Record grant in equity ledger
To Legal: Store for corporate governance records

Technical Requirements for eSigning and eSubmission

Ensure the chosen provider supports records retention, secure storage (AES-256 at rest, TLS 1.2/1.3 in transit), and any required BAA or 21 CFR Part 11 controls for regulated environments.

File Formats: PDF, DOCX and Excel supported
Integrations: Salesforce, NetSuite, Microsoft 365 integrations
Authentication: SMS code, email link, or stronger MFA

Key Dates and Deadlines to Track

Monitor grant, vesting, exercise, and reporting deadlines to meet tax and corporate compliance obligations.

Grant Effective Date:

Date SARs become binding

Vesting Commencement:

Date vesting period begins

Exercise Deadline:

Expiry or post-termination exercise window

Tax Reporting:

Employer reporting at disposition/exercise

Record Retention:

Keep executed copy per retention rules

Common Pitfalls to Avoid When Preparing SAR Agreements

Using vague vesting language that creates ambiguity about when SARs become exercisable, often triggering disputes and rework.
Failing to document board approval or missing corporate minutes, which can invalidate the grant under corporate law or internal policy.
Not specifying settlement mechanics precisely, resulting in disagreement over cash vs share delivery, tax withholding, and netting.
Neglecting to confirm participant identity or use proper eSignature authentication, risking enforceability or regulatory noncompliance.

Principal Risks and Consequences of an Incorrect SAR Agreement

Tax Liability: Additional tax exposure

Forfeiture Risk: Lost award value

Invalid Grant: Corporate action challenge

Breach Claims: Litigation risk

Withholding Failure: Penalties and interest

Administrative Penalties: Regulatory fines possible

Two Practical SAR Agreement Scenarios

Realistic examples show how SAR Agreements operate in common business contexts.

Startup Equity Plan

A founder grants SARs to an early engineer to align incentives.

Vesting is 4 years with a 12-month cliff.
Agreement clarifies settlement mechanics, tax withholding, and acceleration on change in control, reducing future disputes and simplifying payroll processing.

Public Company Award

A public company awards SARs under a long-term incentive plan tied to TSR performance.

Settlement permitted in stock or cash.
Detailed settlement rules and board approval procedures ensure compliance with securities law, internal controls, and consistent reporting for investor disclosures.

eSignature Platform Pricing and Feature Snapshot

Comparison of typical entry-level pricing and select capabilities for commonly considered eSignature vendors; signNow appears first per table convention.

	signNow	DocuSign	Adobe Sign	PandaDoc	HelloSign
Starting Price	$8/user/mo	$15/user/mo	$14/user/mo	$19/user/mo	$15/user/mo
Free Trial	7-day free trial	Varies	Varies	Varies	Varies
Bulk Send	Yes	Yes	Yes	Yes	No
Audit Trail	Yes	Yes	Yes	Yes	Yes
Envelope Cap	No envelope cap	100 envelopes/user/year	Varies	Varies	Varies

Frequently Asked Questions About SAR Agreements and eSignatures

Answers to common legal, tax, and execution questions encountered when preparing or eSigning SAR Agreements.

Need help? Contact support

Can a SAR Agreement be signed electronically?
Yes. Electronic signatures on SAR Agreements are generally enforceable under the ESIGN Act (15 U.S.C. §7001) and UETA where adopted, provided intent and attribution are documented and no statutory exception applies.
What tax event triggers on SAR exercise?
Taxation typically occurs at settlement when appreciation is realized; ordinary income is reported to the participant and withholding obligations apply, with subsequent capital treatment on disposition of any shares received.
Is board approval required for SAR grants?
Most companies require board or authorized committee approval to validly grant SARs; absent proper corporate action, grants may be challenged as invalid or ultra vires.
How should settlement be documented?
Document settlement mechanics in the agreement and preserve records of calculations, stock ledger updates, tax withholdings, and transfer agent instructions to ensure auditability and regulatory compliance.
What if a participant’s name differs from records?
Name mismatches can delay processing and tax reporting; verify legal names against government ID and update corporate records before settlement to avoid withholding or reporting errors.
What retention period applies to SAR Agreements?
Retain executed agreements for the award term plus at least three years to meet IRS recordkeeping norms (IRC §6501(a)); industry rules like HIPAA or SEC may impose longer retention periods.

be ready to get more

Join over 28 million airSlate SignNow users

Sign Now