Hi all, have a bit of technical question with regard to dilution and SAR.
Doing a valuation model at the moment as prep for my SA position this summer at a BB and came across share appreciation rights. I tried to use the 'classic' resources such as Rosenbaum and McKinsey book but didn't find anything useful.
The way I understand SAR is that the company pays the difference between the strike price and the current share price (share appreciation) to the holder of the SAR. However, sometimes they are paid in cash and sometimes in stock.
How would you account for that in the dilution of the shares? As I couldn't find exact info in the annual report I just assumed the 'worst' case wrt to dilution and assume that the company issues shares for the payment. Thus my dilution is [(Current Share Price - Average Strike Price) / Current Share Price].
Is this the correct way of handeling SAR?
Thank you for your help!!!
Et voluptas cupiditate et amet placeat et. Et est corporis omnis. Qui consequatur aut tempora quo vitae molestiae.
Eligendi tempore quam porro sint vel quos. In voluptatibus excepturi accusamus eos nihil. Illum animi et consectetur.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...